Oil’s Rise Is Steering Energy ETFs
On November 2–9, 2017, the SPDR S&P Oil & Gas Exploration & Production ETF (XOP) had the highest correlation of 94.4% with US crude oil active futures on our list of energy subsector ETFs. During this period, XOP rose 4.9%—the second-largest gainer among energy subsector ETFs. The rise in XOP was 10 basis points more than the rise in US crude oil futures during this period.
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The Energy Select Sector SPDR ETF (XLE) and the VanEck Vectors Oil Services ETF (OIH) had correlations of 88.8% and 88.3% with US crude oil active futures in the trailing week. We already discussed XLE’s performance in the previous part of this series. OIH rose 6.1%—the largest on our list of major energy subsector ETFs. AMLP had a correlation of 63.1% with US crude oil active futures in the past five trading sessions. It fell 0.5% in the trailing week.
OIH, XLE, XOP, and AMLP had correlations of 99.5%, 96.7%, 87.9%, and 62% with natural gas futures in the seven calendar days to November 9, 2017, respectively. In fact, natural gas prices rose 9% during this period. Notably, AMLP also had the lowest correlation with US crude oil prices.
S&P 500 Index
In the past five trading sessions, AMLP, OIH, XLE, and XOP had correlations of 61.7%, 23.6%, 10.4%, and 1.7% with the S&P 500 Index (SPY), respectively. The S&P 500 Index rose 0.2% during this period.
Based on the correlations, the gain in oil and natural gas prices could be a key catalyst for most of these ETFs.