Energy ETFs bolstered by rising fossil fuel prices


Fossil fuels, oil, gas and coal continue to rise amid increasing global demand and tightening supply. Brent Crude futures are flirting with $ 80 per barrel, a 3-year high while WTI has hit 7-year highs. Natural gas prices are also at seven-year highs in the United States and record highs in Europe and Asia. Coal futures hit a new record high of $ 204.8 per metric tonne in late September.

Rising post-pandemic global demand, weather-related disruptions in the United States, and looming cold winters in Europe pushed up natural gas prices, which eventually spilled over onto other fossil fuels as countries are looking for alternative energy sources.

The trend spilled over to energy commodity ETFs and energy equity ETFs. With exposure to oil, WisdomTree WTI Crude Oil ETC (CRUD) and WisdomTree Brent Crude (BRNT) have gained more than 3.0% since last Friday. The United States Natural Gas Fund (UNG), which tracks natural gas price movements as a percentage, rose + 12.33% on Monday. The Energy Select Sector SPDR Fund (XLE) ETF, the largest energy equity ETF with $ 23.8 billion in assets, gained 15% between Monday and Friday. The fund invests in oil, gas and consumable fuels, power equipment and services companies of the S&P 500. Its main holdings include Exxon Mobile Corporation (22.61%), Chevron Corporation (20.23%) and EOG Resources (4.91%). In Europe, the Lyxor STOXX Europe 600 Oil & Gas UCITS ETF (OIL), which invests in Europe’s largest oil and gas companies, gained more than 3% this week.

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