4 Energy Mutual Funds To Buy As Oil Prices Rally Above $70

The Energy sector has undoubtedly been one of the best performing sectors so far this year. In fact, the Energy Select Sector SPDR ETF has gained 4.6% year to date. Further, U.S. crude price surged to above $70 a barrel for the first time in a month’s time. Also, U.S. crude inventories declined 9.9 million barrels from the previous week, further pushing oil prices higher.

Moreover, reports that the United States has been urging countries to stop importing oil from Iran by November have been rife. Under such circumstances, investing in energy mutual funds seems prudent.

Oil Prices Touch $70

The energy sector has hit headlines this quarter for various reasons. First, there has been an oil price rally as evident from the nearly 5% rise in the energy sector in the past six months.  On Tuesday, WTI crude increased 3.6% to close at $70.53 a barrel, the highest finish recorded since May 24. Brent crude also gained 2.1% to close at $76.31 a barrel, near a two-week high. Such gains came on the back of multiple factors, boosting supply concerns.

According to a report by The Wall Street Journal, the United States wants all countries to stop importing oil from Iran by Nov 4. This is part of the United States’ efforts to isolate the country economically and politically, per a senior U.S. State Department official.

Major purchasers of Iranian crude were expecting the United States to allow them to reduce such oil imports over an extended period. But the Trump administration has no plans of issuing any waivers for countries that are making efforts to cut Iranian oil imports.

Crude Inventories Dip 9.9 Million Barrels

Per the latest Weekly Petroleum Data for the week ending Jun 22, U.S. crude inventories dipped 9.9 million barrels from the previous week. This came as a pleasant surprise for the space, sending oil prices higher.

Moreover, U.S. crude surged to trade near its highest premium in the last three and a half years. Further, the difference between the front-month futures and September contracts increased to nearly $1.61 in the United States. This was achieved due to backwardation which is caused by a sharp decline in inventories.

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