Keep an eye on oil stocks, like Exxon Mobil (XOM).
With the warmer months ahead, travel plans, and now a supply deficit forecast for this year, oil and related stocks could gush even higher.
Last trading at $81.04, oil could rally to $90, we believe.
According to the International Energy Agency (IEA), we’ll see a slight supply deficit this year, instead of a surplus. All with the IEA assuming that OPEC+ will keep its production cuts in place throughout the year. “Upward revisions on demand growth and lower supply growth estimates result in almost a 400,000 bpd tighter market compared to last month,” said UBS analyst Giovanni Staunovo, as noted by Reuters.
In addition, Morgan Stanley just said investors could get caught off guard by an oil price rally this summer. Those comments came after Ukrainian attacks on Russian refineries, and hopes the Federal Reserve will start cutting rates sometime soon.
Other than major oil names, like XOM, oil related ETFs are just as attractive.
As we’ve noted in prior reports, investors may want to look at:
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.
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.
iShares Global Energy ETF (IXC)
The iShares Global Energy ETF seeks to track the investment results of an index composed of global equities in the energy sector. Some of its top holdings include Exxon Mobil, Chevron Corporation, BP PLC, Total SA, and EOG Resources.
