How to Trade the Potential for $140 Oil by Summer

Jun 08, 2022
Dollars and a drilling rig for crude oil

If you think $5 a gallon is bad, just wait.

Goldman Sachs now says oil could hit $140 a barrel by summer.

All thanks to a drop in Russian oil production, a recovery in Chinese demand, coupled with supply issues. In fact, according to Business Insider, “Goldman’s analysts, including chief commodities strategist Jeff Currie, said in a note Monday that they expected prices to go higher ‘given the current record low levels of inventories.’”

One way to trade the news is with oil stocks, such as Exxon Mobil (XOM), which was just upgraded to outperform, with a price target of $120 from $88 by Evercore ISI.

Or, for greater exposure at less cost, investors can always jump into related ETFs, including;

SPDR Energy Select Sector ETF (XLE)

The last time we mentioned the XLE, it traded at $52.70 in November 2021. It’s now up to $92.16 and surging. The XLE ETF provides exposure to companies in the oil, gas and consumable fuel, energy equipment and services industries, as noted by State Street SPDR. Not only does an ETF allow for diversification, you can buy it for less.

Invesco DB Oil Fund (DBO)

We also mentioned DBO in November 2021 as well. At the time, it traded at $13.85. It’s now up to $20.60 and running. This ETF seeks to track changes, whether positive or negative, in the level of the DBIQ Optimum Yield Crude Oil Index Excess Return plus the interest income from the Fund’s holdings of primarily US Treasury securities and money market income less the Fund’s expenses. It trades WTI crude futures.

iShares Global Energy ETF (IXC)

We also mentioned IXC, as it traded at $27. It’s now up to $42.51. The iShares Global Energy ETF seeks to track the investment results of an index composed of global equities in the energy sector. Trading at $27, some of its top holdings include Exxon Mobil, Chevron Corporation, BP PLC, Total SA, and EOG Resources.