US crude oil prices

On September 1, 2016, active futures contracts for US crude oil (UWTI) (USO) (OIIL) (USL) (SCO) (DWTI) closed at $43.16. That’s a fall of 3.4%—compared to the previous trading session. It’s 15.8% lower than the 2016 high of $51.23 on June 8, 2016.

Crude Oil’s Downturn: AMLP Outperforms Major Energy ETFs

Earlier this week, crude oil fell due to the rise in crude oil inventories and uncertainties about a production freeze deal among major oil producers later this month.

From August 25 to September 1, US crude oil futures contracts for October delivery fell by ~8.8%. Most of the loss could be attributed to renewed supply glut fears.

Natural gas active futures (UNG) fell by ~3.2% during this period due to a higher-than-expected addition to inventories. However, the fall in energy ETFs could be attributed to the fall in oil prices. Later in this series, we’ll analyze the correlations between these ETFs and crude oil and natural gas.

Performance of energy ETFs

Below are the performances of some energy ETFs from August 25 to September 1:

  • Energy Select Sector SPDR ETF (XLE) – fell by ~1.9%
  • Alerian MLP ETF (AMLP) – rose by ~0.2%
  • SPDR S&P Oil & Gas Exploration & Production ETF (XOP) – fell by ~1.4%
  • VanEck Vectors Oil Services ETF (OIH) – fell by ~3.8%

The fall in the above ETFs concurred with the fall of oil prices during this period.

AMLP rose 0.2%. Falling crude oil has less of an impact on midstream companies than other energy sub-industries.

OIH fell the most—the drop in crude oil prices could impact drilling activity. This would have a negative impact on oilfield services companies.

We’ll look at the correlation between energy ETFs and crude oil in Part 4 of this series.

Sentiments related to natural gas (UNG) and crude oil (SCO) (DWTI) also impact other ETFs such as the ProShares Ultra Oil & Gas (DIG), the PowerShares DWA Energy Momentum ETF (PXI), the Vanguard Energy ETF (VDE), the iShares US Energy (IYE), and the Fidelity MSCI Energy ETF (FENY).

In the next part of this series, we’ll compare the price performances of the United States Natural Gas ETF (UNG) and the United States Oil ETF (USO).

Latest articles

German chip maker Infineon Technologies has reportedly raised 1.55 billion euros (~$1.74 billion) in capital by selling its shares to fund its acquisition of Cypress Semiconductor (CY). Infineon has sold ~113 million new shares at 13.70 euros each.

As of June 18, Dunkin’ Brands (DNKN) was trading at $80.07, an 8.9% rise since reporting its first-quarter earnings on May 2. Also, DNKN was trading at a premium of 29.8% from its 52-week low of $61.69 and a discount of 1.6% from its 52-week high of $81.40.

19 Jun

Are Lower Oil Prices Weighing on ExxonMobil Stock?

WRITTEN BY Maitali Ramkumar

ExxonMobil (XOM) stock has fallen 7.1% in the second quarter so far. Let's review ExxonMobil's stock performance in comparison to oil price changes and equity market movements in the quarter.

19 Jun

As Facebook Unveils Libra, MSFT and CRM Join a Blockchain Group

WRITTEN BY Mayur Sontakke, CFA, FRM

On June 18, Facebook (FB) launched Libra, its own cryptocurrency. On the same day, CoinDesk published another piece of blockchain news that didn’t receive as much fanfare as Facebook’s Libra news. Was the timing a coincidence? We think not.

Uber Technologies (UBER) has picked Melbourne as another test site for its flying taxi service known as UberAir. The Australian city is the first international test site Uber has chosen for its flying taxi service. The addition of Melbourne brings the number of test locations Uber has picked for its UberAir service to three.

Lyft (LYFT) and Uber Technologies (UBER) are pushing back against California legislation that would require them to recognize their drivers as employees rather than independent contractors. The legislation would require companies like Lyft to give their drivers the compensation and benefits spelled out under California’s employment regulations.