Oil has been the hottest commodity this year and is on a roller-coaster ride. This is especially true as prices strongly rebounded from a bear territory hit in early June, with U.S. crude comfortably trading above $60. Notably, oil price advanced in 12 of the past 15 sessions and is hovering near the highest level in more than a month.
The latest rally came on the back of shrinking crude inventories and concerns that Tropical Storm Barry could derail crude production in the Gulf of Mexico. In particular, U.S. crude inventories dropped 9.5 million barrels in the week to Jul 5, more than triple the analyst expectation of a 3.1 million-barrel draw (read:
ETFs to Gain From the Oil Rally on US Crude Inventory Data
Ahead of the first major storm of the Atlantic hurricane season, U.S. oil producers have started to cut production in the Gulf of Mexico, which accounts for 17% of U.S. crude oil output or 12 million barrels per day. Chevron Corp
, Royal Dutch Shell
, BP plc
, Anadarko Petroleum
and BHP Group
are in the process of removing staff from 15 offshore platforms. Phillips 66
is expected to close its 253,600-barrel-per-day Alliance, Louisiana, refinery because of the storm threat.
Oil price also got a boost from the latest Iranian attempt to impede a British tanker that may disrupt supply in the Middle East. Moreover, OPEC oil production dropped to the lowest level since April 2014 in June. OPEC and some non-OPEC producers including Russia have extended their oil supply cut pact until March 2020 to tackle global supply glut and rebalance the oil market. Russia also joined Saudi Arabia to extend existing output cuts of 1.2 million barrels per day, or 1.2% of global demand, until December 2019 or March 2020. All these factors bode well for the oil outlook.
Given this, investors might want to tap the space with the top-performing energy ETFs and stocks over the past month. For them, we have highlighted five funds and stocks that are poised to perform well, should oil prices rise. Best ETFs These energy ETFs currently have a Zacks ETF Rank #5 (Strong Sell) yet seem excellent choices to play the trend at least in the near term. VanEck Vectors Oil Services ETF OIH This fund tracks the MVIS U.S. Listed Oil Services 25 Index, which offers exposure to the companies involved in oil services to the upstream oil sector, including oil equipment, oil services or oil drilling (read: 5 Top & Flop ETF Areas of Q2 ). Zacks Rank: #5 AUM: $827 million Expense Ratio: 0.35% 1-Month Return: 10.3% SPDR S&P Oil & Gas Equipment & Services ETF XES This fund tracks the S&P Oil & Gas Equipment & Services Select Industry Index, which measures the performance of companies engaged in the oil and gas equipment and services industry. Zacks Rank: #5 AUM: $176.7 million Expense Ratio: 0.35% 1-Month Return: 9% iShares U.S. Oil Equipment & Services ETF IEZ This ETF offers exposure to U.S. companies that provide equipment and services for oil exploration and extraction by tracking the Dow Jones U.S. Select Oil Equipment & Services Index. Zacks Rank: #5 AUM: $117.1 million Expense Ratio: 0.43% 1-Month Return: 9% PowerShares Dynamic Oil & Gas Services Fund PXJ This product follows the Dynamic Oil Services Intellidex Index, which thoroughly evaluates companies based on a variety of investment merit criteria, including price momentum, earnings momentum, quality, management action and value (see: all the Energy ETFs here ). Zacks Rank: #5 AUM: $15.6 million Expense Ratio: 0.63% 1-Month Return: 7.2% Invesco DWA Energy Momentum ETF PXI This fund follows the Dorsey Wright Energy Technical Leaders Index, which measures the performance of the companies that are showing relative strength (momentum). Zacks Rank: #5 AUM: $16.7 million Expense Ratio: 0.60% 1-Month Return: 6.5% Best Stocks We have highlighted the best-performing stocks that currently have a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold). EP Energy Corporation EPEG ) This company is involved in the acquisition and development of unconventional onshore oil and natural gas. Zacks Rank: #3 VGM Score: C Market Cap: $43.5 million 1-Month Return: 55.8% Torchlight Energy Resources Inc. TRCH It is engaged in the acquisition, exploration and development of oil and natural gas properties primarily in the United States (read: Sector ETFs & Stocks to Bet On This Earnings Season ). Zacks Rank: #3 VGM Score: C Market Cap: $100.37 million 1-Month Return: 37.3% Ensco plc ESV This offshore contract drilling company provides offshore contract drilling services to the international oil and gas industry. You can see . the complete list of today's Zacks #1 (Strong Buy) Rank stocks here Zacks Rank: #2 VGM Score: D Market Cap: $1.9 billion 1-Month Return: 34.1% Nabors Industries Ltd. NBR It owns and operates one of the world's largest onshore drilling rig fleets. Zacks Rank: #3 VGM Score: C Market Cap: $976.9 million 1-Month Return: 28.7% Lonestar Resources US Inc. LONE This oil and gas company is involved in exploration, production and acquisition of unconventional oil and gas reserves. Zacks Rank: #2 VGM Score: D Market Cap: $61.3 million 1-Month Return: 26.8% Want key ETF info delivered straight to your inbox? Zacks' free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free >>
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Click to get this free report SPDR S&P Oil & Gas Equipment & Services ETF (XES): ETF Research Reports iShares U.S. Oil Equipment & Services ETF (IEZ): ETF Research Reports Invesco Dynamic Oil & Gas Services ETF (PXJ): ETF Research Reports Invesco DWA Energy Momentum ETF (PXI): ETF Research Reports VanEck Vectors Oil Services ETF (OIH): ETF Research Reports BHP Billiton Limited (BHP): Free Stock Analysis Report Phillips 66 (PSX): Free Stock Analysis Report Royal Dutch Shell PLC (RDS.A): Free Stock Analysis Report Chevron Corporation (CVX): Free Stock Analysis Report BP p.l.c. (BP): Free Stock Analysis Report Nabors Industries Ltd. (NBR): Free Stock Analysis Report Ensco plc (ESV): Free Stock Analysis Report Torchlight Energy Resources, Inc. (TRCH): Free Stock Analysis Report Anadarko Petroleum Corporation (APC): Free Stock Analysis Report Lonestar Resources US Inc. (LONE): Free Stock Analysis Report Eni SpA (E): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report