Oil prices are gushing.
At the moment, oil is quickly nearing $100 a barrel, a high we haven’t seen since 2014.
“The oil market is heading for simultaneously low inventories, low spare capacity and still low investment,” Morgan Stanley analysts wrote in a research note, lifting their price forecast for the summer quarter by $10 a barrel, to $100 for Brent and $97.50 for West Texas Intermediate,” as noted by The Wall Street Journal.
Two, there could be a war this week. But don’t hold me to that.
The U.S. says Russia is moving into attack positions and will attack by the end of the week.
However, “Hours after issuing a global statement saying he heard Russia would attack his country on Feb. 16, Ukrainian President Volodymyr Zelenskyy walked back the prediction on Monday, clarifying that he was referring only to media reports,” as reported by NBC News.
Three, if there is war, we could see pain at the pump with $150 oil.
“RBC Capital Markets explained one scenario where oil prices could jump to record levels. It has more to do with demand than supply. Oil supplies are growing at a relatively slow rate, in part because OPEC has been unwilling—and potentially unable—to boost production. Several OPEC members are not adding as much supply as they were expected to add under current limits. If Russia invades Ukraine, supply could be reduced again, because countries might impose sanctions on Russian oil and reduce the amount of global supply available.”
So, how do we profit from that potentially nightmarish situation?
One way is to buy the oil heavyweights, like Exxon Mobil (XOM) and Chevron (CVX).
Another way is to invest in the ETFs we’ve mentioned including:
SPDR Energy Select Sector ETF (XLE)
When we first highlighted the XLE, it traded at $52.70. It’s now up to $68.75, and could be headed to $75 near-term unless oil prices run.
The XLE ETF provides exposure to companies in the oil, gas and consumable fuel, energy equipment and services industries, as noted by State Street SPDR. Not only does an ETF allow for diversification, you can buy it for less.
Invesco DB Oil Fund (DBO)
DBO traded at $13.85 when we first mentioned it.
It’s now up to $145.87, and could push higher with oil prices. This ETF seeks to track changes, whether positive or negative, in the level of the DBIQ Optimum Yield Crude Oil Index Excess Return plus the interest income from the Fund’s holdings of primarily US Treasury securities and money market income less the Fund’s expenses. It trades WTI crude futures.
iShares Global Energy ETF (IXC)
IXC was at $27. It’s now up to $33.46 and pushing higher.
The iShares Global Energy ETF seeks to track the investment results of an index composed of global equities in the energy sector. Trading at $27, some of its top holdings include Exxon Mobil, Chevron Corporation, BP PLC, Total SA, and EOG Resources.
