For the 90 days ending October. 20, the S&P 500 Energy Index jumped 6.1%, while the broader S&P 500 slumped nearly 7%. Due in part to geopolitical concerns, oil prices are trending higher, providing support to the energy equity thesis.
Oil services stocks are getting in on the act, living up to their reputation as one of the groups of energy stocks most highly correlated to oil price action. Over the aforementioned span, the VanEck Oil Services ETF (OIH) gained 1.2%, adding to year-to-gain of 12%.
This year, the VanEck exchange traded fund is outpacing the S&P 500 Energy Index by a nearly 2-to-1 margin and more upside could be on the way for OIH as data indicates investors remain bullish on the energy sector.
Catalysts Abound for Energy ETF OIH
Investors are displaying enthusiasm for the energy patch. While it’s obviously constructive for OIH holders when market participants flock to oil services names, there are other important catalysts afoot for OIH member firms.
Notably, data indicates financing activity for energy exploration and production projects remains steady. That’s impressive when considering the renewable energy boom. It could also be a sign that fossil fuels producers are readying to buy or lease more equipment from OIH member firms.
“Bloomberg reported on that development this week, citing data showing that fees from ‘climate-focused financing’ so far this year had reached $2.5 billion. Meanwhile, fees from oil and gas loans and bond underwriting stood at $2.2 billion,” reported Irina Slav for OilPrice.com.