An Alternative To The XLE

Summary

  • Crude oil continues to show strength.
  • Demand continues to grow.
  • The XLE lags.
  • An alternative for investors.
  • Energy powers the world.

Crude oil is the most liquid and closely-watched commodity that trades on the futures exchange. Many investors who do not venture into the leveraged and highly volatile world of futures use the XLE to position in the energy sector. The XLE or the Energy Select Sector SPDR ETF has net assets of 19.38 billion and trades an average of almost 14.5 million shares each day making it a highly liquid trading vehicle. The XLE contains the many of the world's leading energy companies in the world of oil and gas and is the product of choice for many investors looking for exposure to oil and gas.

Meanwhile, another energy instrument, the Vanguard Energy ETF (NYSEARCA:VDE) has outperformed the XLE so far in 2018 and could offer an alternative to those looking to hop on board the bull market in the energy sector that is now two and one-half years old.

One of the most famous oil traders in modern history once said that the energy commodity is the blood that flows through the veins of the world providing energy to the growing number of people on our planet. Economic growth and increasing population and wealth have resulted in a bull market in energy as each day more people, with more money require the energy commodity to power their lives.

Crude oil continues to show strength

Almost all industrial commodities prices fell to lows in late 2015 and early 2016, and crude oil was no exception.

Source: CQG

As the monthly chart highlights, nearby NYMEX crude oil futures fell to lows of $26.05 per barrel in February 2016 after falling from highs of $107.73 in June 2014. Since then, the price of the energy commodity has steadily recovered reaching its most recent peak at $75.27 per barrel in early July. From a technical perspective, after the price of the

The Hecht Commodity Report is one of the most comprehensive commodities reports available today from the #2 ranked author in both commodities and precious metals. My weekly report covers the market movements of 20 different commodities and provides bullish, bearish and neutral calls; directional trading recommendations, and actionable ideas for traders. More than 120 subscribers are deriving real value from the Hecht Commodity Report.

This article was written by

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Andrew Hecht is a 35-year Wall Street veteran covering commodities and precious metals.

He runs the investing group The Hecht Commodity Report, one of the most comprehensive commodities services available. It covers the market movements of 20 different commodities and provides bullish, bearish and neutral calls; directional trading recommendations, and actionable ideas for traders. Learn more.

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

The author always has positions in commodities markets in futures, options, ETF/ETN products, and commodity equities. These long and short positions tend to change on an intraday basis.

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