Best Oil ETFs to Buy in June 2024

Overview of 5 Oil ETFs to Watch for June 2024

THE oil, considered one of the major energy resources on a global scale, can be transformed into gasoline, various fuels as well as a multitude of other by-products such as plastic. Despite the move towards an ecological transition, there is no sign that the world will abandon the use of oil in the near future.

THE oil-focused exchange-traded funds (ETFs) allow investors to gain direct exposure to the oil market by replicating fluctuations in the price of oil, without having to physically purchase or store this raw material. Although investing in oil can offer the prospect of significant returns, it is important to keep in mind that the associated risks can also be considerable.

What are the oil price forecasts for the year 2024?

Last year, almost half of the world’s production of oil and other liquids came from OPEC+ and 10 other countries that coordinate their crude oil production withOPEC since the end of 2016.

In 2023, the oil market was marked by prolonged production cuts by OPEC+ (the Organization of the Petroleum Exporting Countries and its allies), in response to weakening global oil demand and falling crude oil prices. The latest agreement reached by the group, announced on November 30, provides for additional voluntary reductions of 2.2 million barrels per day compared to its crude oil production target, until the first quarter of 2024.

Markets reacted favorably to this development, with oil prices rebounding to reach a peak of $97, representing an increase of 25% since June 2023.

However, China’s economic recovery continued to stand in the way of any sustained and significant increase in oil prices. European countries have also experienced an economic slowdown, with oil demand in Germany falling by 90,000 barrels per day in 2023, according to forecasts by the International Energy Agency (IEA). Furthermore, the war in the Middle East had only a limited impact on oil prices.

In 2024, global oil markets are gearing up to face serious headwinds and major challenges. Analysts anticipate abundant supply, resulting from a slowdown in economic activity combined with growing production in the United States. The IEA forecasts an increase in global oil demand in the coming year, as it highlighted in its latest report.

Goldman Sachs adjusted its forecast downward, anticipating that Brent will trade on average between $80 and $81. This estimate aligns with that of the IEA, which forecasts a Brent price of $82.57 per barrel in 2024. Barclays remains more optimistic, expecting an average oil price of $93 in 2024, while S&P Global considers a price of 85 dollars more appropriate.

To better understand the outlook for oil prices in 2024, the key trend to watch is the state of the global economy, as oil demand is closely linked to economic activity. Global economic indicators remain fragile, with the risk of recession persisting.

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Here are our top 5 Oil ETF to follow for the month of June 2024: