To The Moon

Due to the partial geopolitical premium loss stemming from tensions between Iran and Israel, the largest oil ETF, the United States Oil Fund, announced its largest single-day outflow ever recorded.

The withdrawal amounted to $376 million, surpassing the previous record set in 2009 of $323 million. Prior to this, similar significant inflows were seen over the first two trading days.

Since Iran launched over 300 drones and missiles at Israeli military targets, oil prices have surged, experiencing new fluctuations over the weekend reportedly due to retaliatory strikes by Israel against the Islamic Republic.

U.S. crude oil futures prices are approximately $5 lower than before the attacks, indicating that while the political situation remains tense, the oil market has become more optimistic about the risk of further escalation.

According to CNBC, Phil Flynn, senior market analyst at Price Futures Group, stated that the new hope for easing tensions "has brought new life to oil, especially after it had been sold off sharply." U.S. oil prices also briefly dipped below the 50-day moving average of $81.22 a barrel for the first time since early February, hitting $83 a barrel on April 23, 2024.

Focus ETFs

Energy Select Sector SPDR Fund (XLE)

The Energy Select Sector SPDR is the largest and most popular ETF in the energy sector, with assets under management totaling $37.2 billion and an expense ratio of 0.09%. It offers broad investment opportunities in the energy sector and follows the Energy Select Sector Index. The Energy Select Sector SPDR holds 23 securities in its basket, with ExxonMobil (XOM) and Chevron (CVX) accounting for approximately 40% of the portfolio.

SPDR Oil & Gas Exploration & Production ETF (XOP)

The SPDR Oil & Gas Exploration & Production ETF (XOP) provides investment opportunities in the domestic energy market's exploration and production subsector. With assets under management of $4.2 billion and an expense ratio of 0.35%, XOP's top holdings include PBF Energy (PBF), Valero Energy (VLO), Marathon Petroleum (MPC), and HollyFrontier (HFC). XOP's portfolio consists of 55 stocks, with the top 10 stocks accounting for 26.35% of the fund's assets.

United States Oil Fund (USO)

The United States Oil Fund is the most popular ETF in the oil sector. USO primarily holds short-term WTI crude oil futures contracts. With assets under management of $1.31 billion and an expense ratio of 0.35%, USO's expense ratio is 0.60%. USO announced its largest single-day outflow ever recorded on Wednesday, attributed to the loss of some geopolitical premium due to concerns over a broader Middle East conflict.