The OPEC and its non-OPEC allies, including Russia, together forming the OPEC+ group, have agreed for strikingly deeper output cuts. The OPEC+ group has agreed to deepen existing supply restrictions of 1.2 million barrels per day (bpd) by another 500,000 bpd. This comes to a cut of 1.7 million bpd, amounting to 1.7% of worldwide supply. The members are expected to cut supply output through the first quarter of 2020, in comparison to the extending output cuts until June or December 2020 recommended by some OPEC ministers.
It is worth noting here that OPEC+ has readily supported output cuts since 2017 to compete with growing output levels from the shale fields of the United States, which stands to be the world's biggest producer (read: More OPEC Output Cut in the Cards? Energy ETFs in Focus).
Goldman Raises Oil Estimates
Goldman Sachs (NYSE:GS) raised its oil price estimates for 2020, as it expects restricted inventories following OPEC and its allies’ move to deepen oil production cuts through the first quarter of 2020.
The bank changed its Brent spot price estimate to $63 per barrel for 2020, in comparison to the previous $60. It also raised West Texas Intermediate spot price forecast to $58.5 per barrel from $55.5. Moreover, Goldman Sachs slashed the growth estimate by 50,000 bpd, mentioning chances of improvement in global economic growth on higher consumer spending but a weaker manufacturing sector. The bank now estimates demand growth at 0.9 million bpd and 1.2 million bpd for 2019 and 2020, respectively.
Oil ETFs in Focus
This has compelled a number of investors to take a closer look at the oil commodity space and related ETFs (see all Energy ETFs here).
United States Brent Oil Fund (ASX:BNO)
The fund tracks the daily price movement of Brent crude oil (read: Spate of Positive News Boosts Oil ETFs).
AUM: $81.2 million
Expense Ratio: 0.90%
YTD Return: 28.7%
United States Oil Fund (NYSE:USO) USO
The United States Oil Fund seeks to track the daily price movement of WTI light, sweet crude oil (read: Best & Worst ETF Areas of Last Week).
AUM: $1.20 billion
Expense Ratio: 0.73%
YTD Return: 25.2%
Invesco DB Oil Fund (TSX:DBO)
The fund tracks changes, whether positive or negative, in the level of the DBIQ Optimum Yield Crude Oil Index Excess Return plus the interest income from the holdings of primarily US Treasury securities and money market income less expenses (read: ETFs in Focus as Rising Trade War Tensions Hurt Oil Prices).
AUM: $250.9 million
Expense Ratio: 0.78%
YTD Return: 20.9%
US Commodity Funds United States 12 Month Oil USL
The fund replicates with possible accuracy the movement of West Texas Intermediate light, sweet crude oil.
AUM: $54.4 million
Expense Ratio: 0.82%
YTD Return: 21%
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Invesco DB Oil Fund (DBO): ETF Research Reports
United States Brent Oil Fund LP (BNO): ETF Research Reports
United States Oil Fund, LP (USO): ETF Research Reports
United States 12 Month Oil Fund, LP (USL): ETF Research Reports
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