COM - Oil ticked off a new 8-month high but VanEck says it will hold its value

2023-08-10 13:03:49 ET

Oil ( CL1:COM ) prices were lower in Thursday's midday trading after setting a new 8-month high earlier in the day. After a rally since late June, VanEck expects the elevated prices in crude will hold.

“We expect oil to hold its value due to significant supply-demand imbalances, with the anticipated risk from economic downturns overstated despite investor apprehension from past recessions,” VanEck said in an investor note.

The firm noted that supply is constricting as oil companies adjust to weaker prices, higher costs, and returning cash to shareholders.

The exchange traded fund issuer also stated that OPEC+ has agreed to cut oil production in an effort to support oil prices. At the same time two of the world’s major oil players (Saudi Arabia and Russia) announced further cuts to support oil prices.

“We expect the second half of the year to look nothing like the first half, and with commodities far outpacing stocks in July, it is already starting to work out that way.” VanEck added.

Wall Street has now watched oil advance 25% since it's June 28th low of $67.05/bbl. By the early afternoon Thursday, the price was down about 1% to $83.35/bbl.

Earlier in the day, oil ticked above $85/bbl before moderating. This marked highest trading level since November 17, 2022.

For investors watching the oil market, they may look to further examine the following oil tracking and energy 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 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 )

More on Markets:

• Invesco highlights opportunities in the bond market
• AllianceBernstein says any recession will be mild
• Inflation rises slightly less than expected Y/Y in July, but shelter prices stay strong

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