Energy sector ETFs hit new multi-year highs this week as the conflict between Russia and Ukraine escalates.
The Energy Select Sector SPDR Fund (XLE) hit a high not seen since 2018 on Thursday. The S&P Oil & Gas Exploration and Production (XOP) SPDR ETF has risen to levels not seen since 2019.
On Feb. 24, “When the news broke, we saw an imbalance between big energy companies and more domestically oriented energy stocks,” Matthew Bartolini of State Street Global Advisors told CNBC’s “ETF Edge” this week. “XOP was up the day XLE was down.”
However, both ETFs posted strong trading volumes last week, with XLE raking in more than $500 million in just two days, Bartolini, head of SPDR Americas Research at State Street, said in an interview Monday.
Bartolini helps manage both XLE, which has large allocations from both Chevron and Exxon, and XOP, a more equal fund investing in Occidental Petroleum, ConocoPhillips and other energy producers. The war in Ukraine has sent oil prices soaring above $116 a barrel this week.
“Traders are really looking for position in higher oil, but also in higher oil volatility,” he said.
The Van Eck Oil Services (OIH) ETF, which owns shares in Schlumberger, Halliburton and other oil service providers, has also returned to pre-pandemic highs.
It may have another catalyst, Van Eck Associates CEO Jan van Eck said in the same interview.
“I think we have a lot more advantages for OIH if we expect oil prices to stay high,” he said. “In the end, the majors and [upstream companies] will increase capacity and OIH will benefit from this.”
OIH has risen over 7% since Russia launched its invasion of Ukraine.
Van Eck is a self-described “super bull in commodities” and said the current market environment provides “incredibly good conditions for a multi-year bull market.”