Best Energy ETFs & Stocks Of Q2

Oil was the most volatile commodity with wild swings in the second quarter. Price of oil collapsed to below zero (to negative $40) on Apr 20 for the first time ever as the economic turmoil caused by the coronavirus pandemic has resulted in crashing demand and rising stockpiles.

However, oil made the greatest comeback in history in the wake of production cuts by major oil producers and an uptick in demand with easing lockdowns measures. Oil producers have started scaling back their production at record levels. The most notable development comes from OPEC, the 14-nation organization, and its allies that have agreed to extend historic production cuts of 9 .7 million barrels per day (about 10% of global supply) by another month, through the end of July.

Additionally, the stockpile is declining slowly, easing the storage crisis. The International Energy Agency (IEA) forecasts lower global stockpiles in the second half of 2020, even as worries remain over a second surge in coronavirus infections in the coming months. It expects crude inventories to fall by about 5.5 million barrels per day in the second half of this year.

On the other hand, demand for oil has been recovering across the world as pandemic-forced lockdowns have been lifted. Most notably, oil demand in China, the second-largest market in the world accounting for 15% of the world’s oil demand, is returning to pre-pandemic levels. The upbeat U.S. job report boosted demand for crude. For 2020, the IEA now expects global crude demand to fall by 8.6 million barrels a day versus its April forecast of a decline of 9.3 million barrels. Russia’s Energy Minister Alexander Novak said that crude oil demand could recover to levels last seen before the coronavirus pandemic sometime next year.

Given the improving demand/supply dynamics, crude oil returned to $40 per barrel lately after plunging into negative territory in April. In fact, oil price registered its best month in history, climbing about 88% in May. As a result, the energy sector enjoyed a huge surge. We have highlighted five ETFs & stocks that gained the most in the second quarter and should continue to head higher with the rise in oil price.

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