The Best Oil EFTs To Follow
These portfolios have been selected as examples of six specific forms of oil fund: a Brent oil ETF, a WTI fund, a leveraged oil ETF and a short oil ETF. Additionally funds that control big and small-scale oil stocks.
- WisdomTree Brent Crude Oil
- United States Oil Fund, LP (USO)
- ProShares Ultra Bloomberg Crude Oil (UCO)
- ProShares UltraShort Bloomberg Crude Oil (SCO)
- Energy Select Sector SPDR® Fund (XLE)
- Invesco S&P SmallCap Energy ETF (PSCE)
1-Brent crude oil ETF: WisdomTree Brent Crude Oil (
BRNT)
The WisdomTree Brent Crude Oil ETC is built to monitor the Bloomberg Brent Crude sub-index. This is backed through derivatives owned with the Bank of New York Mellon. Buying BRNT allows you access to Brent price fluctuations – one of the world's most common oil indexes, classified as oil mined in North Sea fields. BRNT had a good result in 2019, however, like other oil projects, it had collapsed in the early months of 2020. Alongside BRNT, WisdomTree also runs a fund that watches the quality of Brent's one-month-expiry futures contracts: OILB.
2-Crude oil (WTI) ETF: United States Oil Fund, LP (USO)
The United States Oil Fund aims to monitor the average percentage increase in the price of soft , sweet oil shipped to Cushing, Oklahoma also known as West Texas Intermediate, or WTI. WTI is the lightest, sweetest oil of the global standards, which indicates that it has minimal sulfur content and is of good quality. All WTI is manufactured in the United States. USO is a commodity ETF, so its holdings are designed to help it track the price of WTI. It is mainly done by derivatives contracts, but it still contains US Treasury bills.
3-Leveraged oil ETF: ProShares Ultra Bloomberg Crude Oil (UCO)
Leveraged oil ETFs are built to multiply the efficiency of the underlying index. ProShares Ultra Bloomberg Crude Oil follows the Bloomberg WTI Crude Oil benchmark, which seeks to reduce its regular movements. So if WTI earns 50 points in a single day, UCO will step up to 100 points. UCO utilizes futures contracts through the New York Mercantile Exchange (NYMEX) and Intercontinental Exchange (ICE) markets to monitor WTI rates.
4-Short oil ETF: ProShares UltraShort Bloomberg Crude Oil (SCO)
In the meantime, the ProShares UltraShort Bloomberg Crude Oil also offers leveraged publicity to WTI. Yet this is a reverse ETF, which means that it tends to travel in the opposite direction. But if WTI earns 50 points in a single day, SCO will go down 100 points. As an inverse ETF, SCO is an unusual oil stock that has risen in price in the last few months. Like UCO, it is using futures contracts to track its index.
5-Large-cap oil ETF: Energy Select Sector SPDR Fund (XLE)
The Energy Select Sector Fund is legendary in terms of ETFs – it was founded back in 1998. It monitors the Energy Select Sector Ranking, which comprises large-scale oil
and gas firms throughout the US, as well as energy machinery. The main shareholders of
XLE include Chevron Oil, ExxonMobil
and ConocoPhillips, three of the biggest US energy firms.
6-Small-cap oil ETF: Invesco S&P SmallCap Energy ETF (PSCE)
Invesco’s S&P SmallCap Energy monitors the S&P SmallCap Energy index. This relies on smaller energy firms that are classified in the United States. Not only does PSCE own energy firms, but 6 percent of its shares are in the Renewable Energy Group, for example. Yet it does provide access to a range of small-scale
oil and gas businesses, including Southwestern Energy, Dril-Quip and Range Resources.
