Energy sector-related exchange traded funds rallied on Monday, with crude oil prices touching a near six-week high, after the U.S. government agreed to release some supply from its emergency reserve in response to ongoing output concerns in the wake of Hurricane Ida.
Source: Original Postress-this.php?">Energy ETFs Advance on U.S. Supply Concerns
On Monday, the ALPS Alerian MLP ETF (NYSEArca: AMLP) increased 1.1% and JPMorgan Alerian MLP Index ETN (NYSEArca: AMJ) advanced 1.2%. The more widely observed Energy Select Sector SPDR Fund (NYSEArca: XLE) gained 2.1%.
Meanwhile, the United States Oil Fund (NYSEArca: USO), which tracks West Texas Intermediate crude oil futures, and the United States Brent Oil Fund (NYSEArca: BNO), which tracks Brent crude oil futures, were also up 1.2% and 1.0%, respectively, on Monday. WTI crude oil futures were up 1.2% to $70.6 per barrel, and Brent crude gained 0.9% to $73.6 per barrel.
“Hurricane Ida’s impact is lasting more than the market expected and as some oil production capacity remains shut this week, prices are rising on supply not being restored and therefore not reaching refineries that have restarted operations quicker than producers,” Nishant Bhushan, oil markets analyst at Rystad Energy, told Reuters.
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Supply problems may be prolonged as market observers look to the next possible hurricane. The U.S. National Hurricane Center projected that Tropical Storm Nicholas could still be categorized as a storm as it brushes along the South Texas coast on Monday and makes landfall later tonight.
The U.S. released some of its crude oil inventories from the emergency reserve to eight companies, relieving some of the supply crunch due to the recent hurricane. The contracts total 20 million barrels of crude oil to be delivered from the Strategic Petroleum Reserve between Oct. 1 and Dec. 15, the department said in a statement.
Nevertheless, the global market continues to see pressure from the ongoing coronavirus pandemic. The Organization of the Petroleum Exporting Countries cut its world oil demand projections for the last quarter of 2021 as a response to the rising infection rates of the COVID-19 Delta variant.
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