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Analytics, 27 May 2022

Investing in oil and gas markets through Oil ETFs

The energy sector is going through one of its best-performing time in recent years. While the S&P 500 index has lost about 16% year-to-date, the Energy Index in the S&P sector is up 55%. Two major factors have contributed to this upside: the reopening of global economies after the pandemic leading to an inevitable recovery from the covid-induced downtrend and the impacts of Russia-Ukraine crisis. The EU’s decision to ban all imports of Russian oil by the end of the year, have also contributed to the upsurge in all prices.

Oil prices have a history of quick and dramatic swings. But one way to capitalize on returns provided by upsurge in oil prices is to trade through oil-energy ETFs. Oil ETFs offer traders the opportunity to trade oil without going through the complexities of oil futures contracts. Oil-energy ETFs have outperformed the broader market, with various leveraged ETFs going over 80% YTD. No doubt investors have flooded oil ETFs, elevating oil volatility.

Here is how to trade oil and gas through oil ETFs.

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