But like all the energy ETFs on this list, if oil and gas prices roll back then the fates of this fund could change in kind. This commodity-focused investment doesn’t give investors exposure to for-profit oil and gas explorers or refiners, but instead offers a play on natural gas future markets. If you want to increase your exposure to this sector, here are nine top energy ETFs to consider. Most of these funds are extremely sensitive to energy-price movements – but that relationship cuts both ways. If you believe there’s additional upside to be had in oil and natural gas – like we saw following the recent OPEC+ output cut announcement – these funds should help you leverage those gains.

For example, the futures contract due to expire next month does not influence USL more than the contract due to expire in 11 months. Each of the 12 monthly contracts in USL receives an equal weighting. Still, with UNG up so much this year and with no end in sight to gas supply disruption, investors 24option forex review may want to consider this smaller and more tactical energy ETF. And with a year-to-date return of more than 30%, there’s a lot to like about IXC. So if you’re looking to play the biggest of Big Oil stocks out there, the iShares Global Energy ETF is one of the best ways to do that.

There are 28 oil and gas stock ETFs that trade in the U.S., excluding inverse and leveraged ETFs as well as funds with less than $50 million inassets under management . The oil and gas exchange-traded funds with the best one-year trailing total returns are PXE, FCG, and IEO. The price of crude oil has dropped significantly since 2015 due to high supply and ease of extraction. Natural gas is also infamous as a seasonally-volatile commodity as prices rise in the winter and freefall in the warmer months. This volatility can pose a significant risk to both short- and long-term savings goals. Oil ETFs are baskets of securities that track the price of oil as a commodity, or contain oil stocks.

Energy Select Sector SPDR Fund (XLE)

Crude oil is a naturally occurring, unrefined petroleum product composed of hydrocarbon deposits and other organic materials. Oil prices sharply spiked following Russia’s invasion of Ukraine earlier this year, although they have since fallen to below pre-invasion levels.

Anyone looking to add oil ETFs or oil-related stocks to their portfolio should consider current oil market conditions before investing. Transparency and Liquidity – This fund invests in liquid futures contracts at publicly available prices determined by trading on regulated futures exchanges. Invesco BD Oil Fund provides exposure to light sweet crude oil , which is the most popular oil benchmark in the world.

The fund purchases contracts of the /CL futures and must roll the contracts to new months as they approach settlement. Currently, the portfolio targets around 20% in the May futures and 20% in the June futures. This means that USO exhibits a lower sensitivity to prices in the Oil market currently, as the active April futures move more aggressively than the May or June contracts. So, while USO provides exposure to the oil futures market, it does not directly track the more volatile, front month futures. FCG aims to track the ISE-Revere Natural Gas Index, which is composed of U.S. companies that generate a substantial portion of their revenues from the exploration and production of natural gas. Securities in the index must also satisfy market cap, liquidity, and weighting concentration requirements.

best oil etf

WTI is the highest-quality sweet crude available, but Brent is actually the most used oil globally. The Invesco DB Oil Fund also trades WTI futures, but it’s designed to track a different benchmark index. Our experts picked 7 Zacks Rank #1 Strong Buy stocks with the best chance to skyrocket within the next days. Sign up for our daily newsletter for the latest financial news and trending topics. Our in-house research team and on-site financial experts work together to create content that’s accurate, impartial, and up to date.

Energy Select Sector SPDR Fund

TJ has a bachelor’s in business administration from Northeastern University. This makes the SPDR S&P Oil & Gas Equipment & Services ETF a less risky option when compared to other oil ETFs on the market. The SPDR S&P Oil & Gas Equipment & Services ETF tracks the S&P Oil & Gas Equipment & Services Select Industry Index and currently has about $286 million in assets.

  • On the other hand, if crude and nat-gas prices head even lower, these ETFs could struggle.
  • Needs to review the security of your connection before proceeding.
  • But oil prices can swing drastically in either direction and can be closely correlated to global and geopolitical events, making it a complex and often risky investment.
  • Securities and Exchange Commission, and ETFs actually own the underlying assets that you, as an investor, own a part of.

The index was launched in 2007 and has an expense ratio of 0.75%. The index has invested in the major chunk of its portfolio in the biggest corporations of the sector as shown in the table above. Like other oil ETFs, USL also was adversely affected by Covid-19 and the resultant lockdown.

ETF of the Week: CNRG and XOP

Oil & Gas Exploration & Production ETF seeks to track the investment results of an index composed of U.S. equities in the oil and gas exploration and production sector. OILK offers exposure to three separate WTI oil futures contracts. The first follows a monthly roll schedule while the second and third hold June through December contracts, which are rolled every March and September, respectively.

For a well-diversified portfolio, investors should look to consider adding some of these best Canadian Oil ETFs to their holdings. Suncor was founded way back in 1919 and has been a mainstay in the Canadian energy sector ever since. A great example of this was the COVID–19 pandemic, where the price of oil plummeted, and there was an overabundance of oil supply. Canadian investors can buy Oil ETFs like HOG and HXE with no trading fees for buying or selling. As mentioned, RYE trades on US markets so Canadian investors will likely need to pay foreign exchange to buy shares in US dollars.

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best oil etf

Because Brent Crude often trades at a different price from West Texas Intermediate , BNO can be a useful way of gaining alternative exposure. Specifically, it is tied to futures contracts linked to natural gas delivered at the Henry Hub, Louisiana, terminal and traded on the New York Mercantile Exchange. This is one of the most direct investments you can make in natural gas – and as the price of this fuel has soared, UNG has tacked on a stellar gain of more than 80% so far this year. This has not only made it one of the best energy ETFs, but also one of the best performing funds of any flavor on Wall Street.

And with a generous dividend yield for shareholders, there is a lot of incentive for low-risk and income-oriented investors to consider exposure to this top energy ETF. Since AMLP only focuses on these kinds of companies, its dividend yield is double that of many other energy ETFs. It’s also far more stable as a result, as storage and transportation of energy is reliable and relatively insulated from commodity price volatility that can upset drilling or refining operations. Energy stocks and exchange-traded funds were a popular bet heading into 2022. So far, so good – the sector has been by far and away the best performer as the end of the year nears. The lower the average expense ratio for all U.S.-listed ETFs in an industry, the higher the rank.

ELEMENTS Rogers International Commodity Index Energy ETN- RJN

Despite this being a sector ETF, XEG comes with a high-risk rating. This is likely more due to the volatility in month-to-month oil prices, rather than the underlying companies. These energy funds offer exposure to oil and gas stocks, which are some of the rare outperformers in an otherwise miserable year.

Energy Information Administration, the United States used around 18 million barrels of oil every day in 2020. The international daily demand for crude oil is at an all-time high, and data from Statista suggests the world consumes over 99 million barrels of oil every day. NerdWallet strives to keep its information accurate and up to date. This information may be different than what you see when you visit a financial institution, service provider or specific product’s site. All financial products, shopping products and services are presented without warranty.

Oil and gasoline companies have taken steps to make oil burning as “clean” as possible. From fuel stabilizers to ethanol-free gasoline that limits emissions, technology has made oil more sustainable than ever . A large percentage of the world depends upon oil to create energy, and all signs point to aggressive just2trade minimum deposit future demand. Therefore, an oil ETF focuses on the oil industry and everything related to it. The scoring formula for online brokers and robo-advisors takes into account over 15 factors, including account fees and minimums, investment choices, customer support and mobile app capabilities.

iShares Global Clean Energy ETF

BNO’s aim is that daily percentage changes in its shares’ net asset value are mirrored in fluctuations in the spot price of Brent Crude oil. The spot price of Brent is measured 4xcube review by movements in the price of the BNO’s Benchmark Oil Futures Contract. The ETF’s benchmark is a near-month futures contract that is traded on the ICE Futures Exchange.

We believe everyone should be able to make financial decisions with confidence. The offers that appear in this table are from partnerships from which Investopedia receives compensation. Investopedia does not include all offers available in the marketplace. “Barclays suspends sales of two products linked to oil, volatility.” The ETF has a beta of 2.08 and standard deviation of 60.29% for the trailing three-year period, making it a high risk choice in the space.