Top Ways to Trade Gushing Oil Prices

Jul 31, 2023
Oil field site, in the evening, oil pumps are running, The oil pump and the beautiful sunset reflected in the water, the silhouette of the beam pumping unit in the evening.

Oil prices are gushing higher.

Last checked, oil was up another 87 cents to $81.45, and could push higher. The last time we spoke about potential opportunities in oil, it traded at around $72 a barrel. In fact, we also noted that should oil turn higher, investors may want to pay close attention to several ideas.

For one, we mentioned Occidental Petroleum (OXY), Chevron (CVX), and Exxon Mobil (XOM) on June 5. And, as you can see, OXY and CVX pushed aggressively higher. XOM remained flat. We also mentioned three ETFs including:

SPDR Energy Select Sector ETF (XLE)

With an expense ratio of 0.12%, 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 than a single one of its holdings. Since June 5, the XLE ran from about $80 to $87.23 so far.

SPDR S&P Oil & Gas Exploration & Production ETF (XOP)

With an expense ratio of 0.35%, the ETF provides exposure to the oil and gas exploration and production segment of the S&P TMI, which comprises the following sub-industries: Integrated Oil & Gas, Oil & Gas Exploration & Production, and Oil & Gas Refining & Marketing, as noted by State Street SPDR. Some of its top holdings include Callon Petroleum, SM Energy Company, Devon Energy Corporation, EOG Resources, and ConocoPhillips, for example.

Since June 5, the XOP ran from about $123 to $142.76.

iShares Global Energy ETF (IXC)

The iShares Global Energy ETF tracks stocks, such as Exxon Mobil, Chevron Corporation, BP PLC, Total SA, and EOG Resources. Since June 5, the IXC ran from about $36 to $39.57.

Overall, not bad if you were in these ideas.

From here, we’re still bullish on oil. Not only for summer driving demand, but also because of voluntary output cuts into September, and a pickup in demand. In fact, according to Reuters, oil demand jumped to a record 102.8 million bpd in July.