5 ETF Areas Set To Soar On Historic Oil Price Collapse

Oil is experiencing the worst rout ever with the front-month WTI futures contract, which expired on Apr 21, turning negative for the first time in history on Apr 20. The pain deepened with the extended decline in June WTI and Brent contracts.

June WTI contract has plummeted to below $11 per barrel today from $20 on Apr 20 while Brent contract has collapsed to the lowest since 1999 to below $16 per barrel, down from $26 on Apr 20. Analysts expect a rerun of negative prices once again in a month’s time.

With the latest slide, oil price has plummeted by around 80% this year as the coronavirus pandemic brought the economy to a standstill, leading to an unprecedent fall in demand and rise in crude storage. The International Energy Agency warned of lowest oil demand in 25 years. It expects oil demand in April to fall below last year’s average by 29 million barrels per day to levels not seen since 1995. Oil demand is expected to drop 23.1 million barrels per day in the second quarter before a gradual recovery in the second half of the year.

Meanwhile, storage at Cushing — America’s key storage hub — has grown to more than 15 million barrels in the past month, up 48% since the end of February, and is expected to soon be at capacity for the first time ever. Per ClipperData Crude, stockpiles are now above 500 million barrels for the first time since June 2017. The deteriorating fundamentals have more than offset the efforts taken by OPEC and its allies to cut oil production by 9.7 million barrels a day starting on May 1 through Jun 30 to balance the oil market.

Though negative oil price has sent shockwaves through the global energy sector, especially oil producers and explorers, it has been a blessing for a few corners of the market, including airlines, retail, consumer discretionary, oil importers and refiners. We have highlighted one ETF from these zones that is expected to benefit from lower oil price:

U.S. Global Jets ETF (JETS - Free Report)

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