Avoid Oil Futures ETFs, Buy Equities Like XLE

September 02, 2015

Takeaway For Investors
For exchange-traded fund investors and traders, that means it's probably a good idea to avoid ETFs like USO and UWTI, which could plummet if oil inventories test capacity limits.

Instead, consider focusing on energy equity ETFs like the iShares U.S. Oil & Gas Exploration & Production ETF (IEO | A-95) or the Energy Select SPDR (XLE | A-93), which may look through the short-term downturn toward a rosier longer-term outlook for oil prices.

Turning to this week’s EIA inventory figures, total petroleum inventories in the U.S. increased by 5.7 mmbbl, against the five-year average of a 2.1 mmbbl decrease. In turn, the inventory surplus decreased to 175.1 mmbbl, or 15.7 percent, against the five-year average.

Crude oil inventories rose by 4.7 mmbbl, against the five-year average of a 3.2 mmbbl decrease. In turn, the surplus in the crude category jumped to 97.5 mmbbl, or 27.2 percent.

Regionally, inventories inside and outside the Midwest rose.

Find your next ETF

Reset All