The onset of the pandemic had weak demand for about every good in the U.S. except toilet paper. The traditional energy sector is the basis for so much of the economy that this, in turn, caused a huge oversupply, so much so that oil prices dipped into the negative. Pent-up demand and smaller supply put the traditional energy sector in a good place for a comeback as OPEC members have slowed production. As the economy opens back up, oil and gas will benefit from returning commutes, travel plans, and all the goods circulating the economy as well. Energy ETFs like the SPDR fund XLE, which has holdings of exclusively U.S. energy companies—with its largest holdings being among Exxon Mobil, Chevron, and ConocoPhillips—are in a bullish position to rally from the reopening. VanEck Vectors Oil Services (OIH) SPDR’s Oil and Gas Production ETF (XOP) also hold a collection of major oil and gas companies.
FINSUM + Magnifi: Commodities and energy stocks are in the best position to benefit from the reopening and returning to normalcy and a quick vaccine turnaround might make that sooner rather than later. Get ahead of the next commodities supercycle.
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