Time to buy oil and gas services ETFs?

Time to buy oil and gas services ETFs?

One of the aspects that most interests us here at the Daily Energy Dump is the exponential growth of other industry that is created by growth in the oil and gas industry. It’s not just the bottom line of the big companies like ExxonMobil, with a market cap of more than $383 billion, but the oil and gas services industries, which drives the exploration, drilling, hauling, feeding, housing and shipping of its work force. There are potentially good investments to be found.

But how to pick? One method is by buying into exchange traded funds (ETFs), which allow investors diversification of an indexed fund, with lower expense ratios than in an average mutual fund.

As Zacks ETF Research notes in an article today, “due to how closed-off many American and Western firms are from emerging market oil fields, a bigger focus on domestic supplies has begun to take place with special care to this shale market. This has acted as a huge catalyst for oil and gas equipment companies and it could help to power these firms to further growth in the months ahead.”

The top three oil services companies include Schulmberger Limited (SLB), often-reviled Halliburton Company (HAL), and National Oilwell Varco Inc. (NOV), but there are others worth looking into. We are not advocating buying into any particular ETF. Nor are we representing any of these funds other than what we observe from reading about them. We are simply noting that there a number with pretty good track records, and if one is interested in investing deeper into the oil and gas market, these ETFs might be a good bet.

The linked article talks of these funds: Market Vector Oil Services ETF (OIH), Dow jones U.S. Oil Equipment & Services Index Fund (IEZ), SPDR S&P Oil & Gas Equipment & Services ETF (XES), and, Dynamic Oil & Gas Services Portfolio (PXJ).

“Furthermore, although oil prices have been weak, natural gas has finally started to bounce back suggesting that this market could begin to attract more attention in the future as well. Given both the importance of domestic supplies and the more bullish environment in natural gas, it could be an interesting time to take a closer look at the oil and gas equipment space as a way to play growth in the space,” the Zachs article says.

Via Yahoo Finance



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