## [# ETF Winners & Losers As US Oil Output Drops](/sections/news/etf-winners-losers-us-oil-output-drops)
# ETF Winners & Losers As US Oil Output Drops
Certain energy ETFs are doing better than others as U.S. oil production dips to the lowest point since October 2014.
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[By Sumit Roy ](/authors/sumit-roy)
Apr 19, 2016
Edited by: Sumit Roy
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After stumbling badly in 2015, energy has made a comeback this year. Brent crude oil is up 15% year-to-date, while West Texas Intermediate is up about 7% in the period. That compares to losses of more than 30% for the pair last year.
**YTD Crude Oil Prices**
Those gains include the modest pullback in prices early this week that followed failed weekend talks between large oil-production countries to freeze their production. Few people believed that OPEC nations and Russia would adhere to any potential agreement in the first place; thus, the market impact from the event was limited.
**US Output Drops Below 9 Million Barrels A Day**
The biggest driver of oil currently―and the reason prices are up 50% from their January lows―are U.S. production levels.
Week after week, output in the States has been dripping lower, falling below 9 million barrels/day last week for the first time since October 2014. In fact, U.S. production is now down about 600,000 barrels/day from its highs, according to weekly data from the Energy Information Administration.
**US Crude Oil Production**
That, along with rising demand, has done a lot to eat into the glut of crude that's drowned prices during the past two years. Moreover, while most analysts agree that the market remains oversupplied, many tend to believe it's only a matter of time before falling U.S. output completely rebalances the market, perhaps even pushing it into a deficit.
If that happens, oil prices will need to rise high enough―perhaps to more than $50, or even $60―to spur U.S. producers to drill again.
As this bullish view has gained momentum, [energy ETFs](https://www.etf.com/etf-lists/energy-etfs) of all stripes rebounded from their lows of the year, with many now in the green for 2016.
**Leading The Way**
Oil futures-tracking ETFs such as the [Brent Oil Fund (BNO)](https://etf.com/bno) or the [United States Oil Fund (USO | B-100)](https://www.etf.com/USO) haven't fared as well as one might think, due to the [effects of contango](https://www.etf.com/etf-education-center/21018-why-you-cant-buy-spot-oil-a-guide-to-contango-and-backwardation.html). BNO gained only 6.9% so far this year, while USO lost 7.9%.
The better returns have been in the equity space, where energy stocks are the third-best sector within the S&P 500 in 2016, behind only telecoms and utilities.
The ETF that tracks all S&P 500 energy companies, the [Energy Select SPDR (XLE | A-91)](https://www.etf.com/XLE), gained 7.7% year-to-date.
Even better has been the [Guggenheim Canadian Energy Income ETF (ENY | C-79)](https://www.etf.com/ENY), up 19.1%, or the [Market Vectors Unconventional Oil & Gas ETF (FRAK | B-26)](https://www.etf.com/FRAK), up 15.3%.
**YTD Returns For BNO, USO, XLE, ENY, FRAK**
**E&Ps Outperforming Oil Services & MLPs**
As far as equity-based energy ETF returns are concerned, XLE is in the middle of the pack this year, while ENY and FRAK are at the top of the heap. With a few exceptions, the funds that outperformed so far this year focus on exploration and production companies in particular, or the energy sector more broadly.
The ones that have underperformed focus on oil and gas services companies, natural gas or MLPs.
For example, the [Market Vectors Oil Services ETF (OIH | A-50)](https://www.etf.com/OIH) rose by only 4.4% year-to-date, while the [First Trust ISE-Revere Natural Gas ETF (FCG | B-95)](https://www.etf.com/FCG) edged up by 1.5% and the [Alerian MLP ETF (AMLP)](https://www.etf.com/AMLP) lost 1.5%.
**YTD Returns For OIH, FCG, AMLP**
All three of these ETFs lagged the return of the broad-based XLE due to distinct fundamental factors.
With drilling activity severely curtailed, service companies have little pricing power in the current environment, though they may do better later in the cycle if oil rises high enough.
Meanwhile, natural gas prices remain in the tank, below $2/mmbtu, following a warm winter. Furthermore, in contrast to oil, natural gas production remains stubbornly high, near record levels.
Finally, MLPs―which are typically energy infrastructure companies―have been hurt by the decline in U.S. output. Less volume means less oil to transport and store for these midstream companies.
Any resurgence in [MLPs ETFs](https://www.etf.com/Equity_U_S_MLPs) may depend on whether U.S. output reverses course and begins to rise again.
**Related ETFs: [BNO](https://www.etf.com/BNO), [USO](https://www.etf.com/USO), [XLE](https://www.etf.com/XLE), [ENY](https://www.etf.com/ENY), [FRAK](https://www.etf.com/FRAK), [OIH](https://www.etf.com/OIH), [FCG](https://www.etf.com/FCG), [AMLP](https://www.etf.com/AMLP)**
*Contact Sumit Roy at* [*sroy@etf.com*](mailto:sroy@etf.com)*.*
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[ Sumit Roy Senior ETF Analyst ](/authors/sumit-roy)
Sumit Roy is the senior ETF analyst for etf.com and author of (Don't) Invest Like a Pro. He creates a variety of content for the platform, including… [View Bio](/authors/sumit-roy)
Related Topics [Oil](http://www.etf.com/topics/oil)
[Commodities](http://www.etf.com/topics/commodities)
[Natural Gas](http://www.etf.com/topics/natural-gas)
[Energy](http://www.etf.com/topics/energy)