XOP - Invesco: Higher energy prices could fuel near-term inflation pressure

2023-08-16 15:01:26 ET

Invesco argued Wednesday that rising energy prices could curtail the process of bringing down elevated levels of inflation. Still, the firm said the longer-term disinflationary trend should continue.

“We could see upward pressure on headline inflation in the near term if energy prices increase in coming months,” Kristina Hooper, Chief Global Market Strategist of Invesco, stated , although she added "I believe a temporary increase in energy prices will not significantly alter the core disinflationary process that is underway.”

As of Wednesday afternoon, oil ( CL1:COM ) prices dipped below $80 per barrel for the first time since August 8. The commodity has declined 6.1% from its recent peak of $84.89 per barrel. However, despite the recent stumble, crude still trades higher by 19.3% from its June low of $66.80 per barrel.

For market participants that are tracking the energy sector, they may look to further analyze the following oil and energy tracking ETFs.

Oil Tracking ETFs

• United States Oil Fund LP ( NYSEARCA: USO )
• ProShares Ultra Bloomberg Crude Oil ( NYSEARCA: UCO )
• Invesco DB Oil Fund ( DBO )
• United States 12 Month Oil Fund LP ( USL )

Energy Focused ETFs

• Energy Select Sector SPDR Fund ( NYSEARCA: XLE )
• Vanguard Energy ETF( NYSEARCA: VDE )
• SPDR S&P Oil & Gas Exploration & Production ETF ( XOP )
• VanEck Oil Services ETF ( OIH )

While Invesco believes inflation may be receding on the longer-term horizon, David Einhorn’s Greenlight Capital has the opposite view, stating : “We believe inflation is stickier and more entrenched than the market is currently appraising.”

More on Markets:

• Ray Dalio’s Pure Alpha reportedly had bearish stance going into recent market pullback
• VanEck highlights free cash flow and not earnings when it comes to gold mining companies
• Wells Fargo calls for slower growth and predicts an S&P 500 year-end target of 4,000-4,200

For further details see: