ETFs & Stocks to Ride on Oil's Biggest Quarter in Decade

Dodging fears of a slowdown in global economy, oil price has been on a spectacular ride this year on tightening global supply conditions (read: Wall Street's Best Start Since 1987: Top ETFs of Top Sectors).

The real optimism came from OPEC-led fresh crude output cuts as major oil producers agreed to curb production by 1.2 million barrels per day during the first six months of 2019 in order to tackle global supply glut and rebalance the oil market. The 14-member OPEC cartel has agreed to reduce its output by 800,000 barrels per day, while Russia and the allied producers will remove 400,000 barrels per day from the market.

Additionally, falling output from Iran and Venezuela due to U.S. sanctions led to optimism in the space as it threatened to disrupt global oil trade flows. Hopes over the trade deal between the United States and China have also lifted investor sentiments. Given this, oil prices posted their biggest increases in nearly a decade in the first quarter and this strong momentum is likely to continue given the positive data flow regarding upbeat manufacturing data from the two world's biggest economies that has eased fears of global slowdown (read: Make the Most of the Oil Rush With These ETFs).

Further, the latest report from the Energy international Agency (EIA) revealed that output in the United States declined 90,000 barrels per day between December and January. Moreover, the prospect of more U.S. sanctions against Iran and halting of production at a crude terminal in Venezuela threaten to constrict supply, thereby providing additional support to the oil price spike. Per Reuter’s survey, supply from the OPEC hit a four-year low in March as the top exporter Saudi Arabia cut more than it had agreed to, due to the involuntary declines.

As a result, energy ETFs and stocks that have generated handsome returns so far this year are expected to do so at least in the near term as well. Below we have highlighted them:

Best ETFs

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 the companies engaged in the oil and gas equipment and services industry (read: 4 Market-Beating Sector ETFs of the First Quarter).

Zacks Rank: #4 (Sell)
AUM: $225.2 million
Expense Ratio: 0.35%
YTD Return: 31.4%

Invesco Dynamic Oil & Gas Services ETF 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.

Zacks Rank: #5 (Strong Sell)
AUM: $19.5 million
Expense Ratio: 0.63%
YTD Return: 27.8%

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: #4
AUM: $159.9 million
Expense Ratio: 0.43%
YTD Return: 26.5%

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: U.S. Manufacturing Sector Grows in March: ETF & Stock Picks).

Zacks Rank: #3 (Hold)
AUM: $855.1 million
Expense Ratio: 0.35%
YTD Return: 25.5%

InfraCap MLP ETF AMZA

This actively managed ETF seeks to provide exposure to midstream master limited partnerships (MLPs) with an emphasis on high current income.

Zacks Rank: N/A
AUM: $479.7 million
Expense Ratio: 2.40%
YTD Return: 24.9%

Best Stocks

Ion Geophysical Corporation IO

This company is a leading provider of geophysical technology, services, and solutions for the global oil & gas industry.

Zacks Rank: #3
VGM Score: A
Market Cap: $227.61 million
YTD Return: 213.5%

Flotek Industries Inc. FTK

This company develops and delivers prescriptive chemistry-based technology, including specialty chemicals, to clients in the energy, consumer industrials and food & beverage industries.

Zacks Rank: #3
VGM Score: C
Market Cap: $189.26 million
YTD Return: 202.7%

Torchlight Energy Resources Inc. TRCH

This company is engaged in the acquisition, exploration and development of oil and natural gas properties primarily in the United States (see: all the Energy ETFs here).

Zacks Rank: #3
VGM Score: D
Market Cap: $110.4 million
YTD Return: 172.9%

Ferrellgas Partners L.P. FGP

This is engaged in the sale, distribution, marketing and trading of propane and other natural gas liquids.

Zacks Rank: #3
VGM Score: D
Market Cap: $125.3 million
YTD Return: 141.1%

Smart Sand Inc SND

This company is a producer of northern white raw frac sand for the oil and gas industry.

Zacks Rank: #3
VGM Score: A
Market Cap: $187.4 million
YTD Return: 105.9%

Bottom Line

Though many of the products have an unfavorable Zacks Rank of #4 or 5, these are the winners so far this year. This suggests that the fundamentals for the energy market are extremely strong with the ability to stir up every kind of ETFs & stocks in the sector.

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SPDR S&P Oil & Gas Equipment & Services ETF (XES): ETF Research Reports
 
Invesco Dynamic Oil & Gas Services ETF (PXJ): ETF Research Reports
 
InfraCap MLP ETF (AMZA): ETF Research Reports
 
iShares U.S. Oil Equipment & Services ETF (IEZ): ETF Research Reports
 
VanEck Vectors Oil Services ETF (OIH): ETF Research Reports
 
Ion Geophysical Corporation (IO) : Free Stock Analysis Report
 
Ferrellgas Partners, L.P. (FGP) : Free Stock Analysis Report
 
Flotek Industries, Inc. (FTK) : Free Stock Analysis Report
 
SMART SAND INC (SND) : Free Stock Analysis Report
 
Torchlight Energy Resources, Inc. (TRCH) : Free Stock Analysis Report
 
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