5 ETFs & Stocks Riding High on Oil Rebound

Oil has been the hottest commodity this year and is on a roller-coaster ride. This is especially true as prices strongly rebounded from a bear territory hit in early June, with U.S. crude comfortably trading above $60. Notably, oil price advanced in 12 of the past 15 sessions and is hovering near the highest level in more than a month.

The latest rally came on the back of shrinking crude inventories and concerns that Tropical Storm Barry could derail crude production in the Gulf of Mexico. In particular, U.S. crude inventories dropped 9.5 million barrels in the week to Jul 5, more than triple the analyst expectation of a 3.1 million-barrel draw (read: ETFs to Gain From the Oil Rally on US Crude Inventory Data).

Ahead of the first major storm of the Atlantic hurricane season, U.S. oil producers have started to cut production in the Gulf of Mexico, which accounts for 17% of U.S. crude oil output or 12 million barrels per day. Chevron Corp CVX, Royal Dutch Shell RDS.A, BP plc BP, Anadarko Petroleum APC and BHP Group BHP are in the process of removing staff from 15 offshore platforms. Phillips 66 PSX is expected to close its 253,600-barrel-per-day Alliance, Louisiana, refinery because of the storm threat.

Oil price also got a boost from the latest Iranian attempt to impede a British tanker that may disrupt supply in the Middle East. Moreover, OPEC oil production dropped to the lowest level since April 2014 in June. OPEC and some non-OPEC producers including Russia have extended their oil supply cut pact until March 2020 to tackle global supply glut and rebalance the oil market. Russia also joined Saudi Arabia to extend existing output cuts of 1.2 million barrels per day, or 1.2% of global demand, until December 2019 or March 2020. All these factors bode well for the oil outlook.

Given this, investors might want to tap the space with the top-performing energy ETFs and stocks over the past month. For them, we have highlighted five funds and stocks that are poised to perform well, should oil prices rise.

Best ETFs

These energy ETFs currently have a Zacks ETF Rank #5 (Strong Sell) yet seem excellent choices to play the trend at least in the near term.

VanEck Vectors Oil Services ETF OIH

This fund tracks the MVIS U.S. Listed Oil Services 25 Index, which offers exposure to the companies involved in oil services to the upstream oil sector, including oil equipment, oil services or oil drilling (read: 5 Top & Flop ETF Areas of Q2).

Zacks Rank: #5
AUM: $827 million
Expense Ratio: 0.35%
1-Month Return: 10.3%

SPDR S&P Oil & Gas Equipment & Services ETF XES

This fund tracks the S&P Oil & Gas Equipment & Services Select Industry Index, which measures the performance of companies engaged in the oil and gas equipment and services industry.

Zacks Rank: #5
AUM: $176.7 million
Expense Ratio: 0.35%
1-Month Return: 9%

iShares U.S. Oil Equipment & Services ETF IEZ

This ETF offers exposure to U.S. companies that provide equipment and services for oil exploration and extraction by tracking the Dow Jones U.S. Select Oil Equipment & Services Index.

Zacks Rank: #5
AUM: $117.1 million
Expense Ratio: 0.43%
1-Month Return: 9%

PowerShares Dynamic Oil & Gas Services Fund PXJ

This product follows the Dynamic Oil Services Intellidex Index, which thoroughly evaluates companies based on a variety of investment merit criteria, including price momentum, earnings momentum, quality, management action and value (see: all the Energy ETFs here).

Zacks Rank: #5
AUM: $15.6 million
Expense Ratio: 0.63%
1-Month Return: 7.2%

Invesco DWA Energy Momentum ETF PXI

This fund follows the Dorsey Wright Energy Technical Leaders Index, which measures the performance of the companies that are showing relative strength (momentum).

Zacks Rank: #5
AUM: $16.7 million
Expense Ratio: 0.60%
1-Month Return: 6.5%

Best Stocks

We have highlighted the best-performing stocks that currently have a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold).

EP Energy Corporation EPEG)

This company is involved in the acquisition and development of unconventional onshore oil and natural gas.

Zacks Rank: #3
VGM Score: C
Market Cap: $43.5 million
1-Month Return: 55.8%

Torchlight Energy Resources Inc. TRCH

It is engaged in the acquisition, exploration and development of oil and natural gas properties primarily in the United States (read: Sector ETFs & Stocks to Bet On This Earnings Season).

Zacks Rank: #3
VGM Score: C
Market Cap: $100.37 million
1-Month Return: 37.3%

Ensco plc ESV

This offshore contract drilling company provides offshore contract drilling services to the international oil and gas industry. You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

Zacks Rank: #2
VGM Score: D
Market Cap: $1.9 billion
1-Month Return: 34.1%

Nabors Industries Ltd. NBR

It owns and operates one of the world's largest onshore drilling rig fleets.

Zacks Rank: #3
VGM Score: C
Market Cap: $976.9 million
1-Month Return: 28.7%

Lonestar Resources US Inc. LONE

This oil and gas company is involved in exploration, production and acquisition of unconventional oil and gas reserves.

Zacks Rank: #2
VGM Score: D
Market Cap: $61.3 million
1-Month Return: 26.8%

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SPDR S&P Oil & Gas Equipment & Services ETF (XES): ETF Research Reports
 
iShares U.S. Oil Equipment & Services ETF (IEZ): ETF Research Reports
 
Invesco Dynamic Oil & Gas Services ETF (PXJ): ETF Research Reports
 
Invesco DWA Energy Momentum ETF (PXI): ETF Research Reports
 
VanEck Vectors Oil Services ETF (OIH): ETF Research Reports
 
BHP Billiton Limited (BHP) : Free Stock Analysis Report
 
Phillips 66 (PSX) : Free Stock Analysis Report
 
Royal Dutch Shell PLC (RDS.A) : Free Stock Analysis Report
 
Chevron Corporation (CVX) : Free Stock Analysis Report
 
BP p.l.c. (BP) : Free Stock Analysis Report
 
Nabors Industries Ltd. (NBR) : Free Stock Analysis Report
 
Ensco plc (ESV) : Free Stock Analysis Report
 
Torchlight Energy Resources, Inc. (TRCH) : Free Stock Analysis Report
 
Anadarko Petroleum Corporation (APC) : Free Stock Analysis Report
 
Lonestar Resources US Inc. (LONE) : Free Stock Analysis Report
 
Eni SpA (E) : Free Stock Analysis Report
 
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