Best Oil ETFs to Buy in January 2024

Overview of 5 Oil ETFs to Watch for January 2024

Considered one of the world’s most important sources of energy, oil can be refined into gasoline, other fuels, and many other products such as plastics. Despite the trend towards ecological transition, there is no indication that the world will stop using oil in the near future.

THAT Oil Exchange Traded Funds (ETFs) giving investors direct access to the oil market by copying the price of oil without incurring the obligation to purchase or store the physical commodity. While investing in oil offers the opportunity for significant returns, be aware that the risks can also be high.

What are the oil price forecasts for the year 2024?

About half of all oil and other liquids produced globally last year came from OPEC+ and 10 other countries that have coordinated their crude production with OPEC since late 2016.

Oil markets in 2023 have been marked by prolonged production cuts by OPEC+ (the Organization of the Petroleum Exporting Countries and its allies) in response to a weakening of global oil demand and falling crude oil prices. The group’s latest deal, announced on November 30, included further voluntary reductions of 2.2 million bpd in its crude oil production target through the first quarter of 2024.

Markets reacted positively to this development and oil prices rebounded to peak at $97, up 25% since June 2023.

Apart from this, China’s economic recovery has continued to thwart any sustained and significant rise in oil prices. European countries have also experienced an economic slowdown, with oil demand in Germany falling by 90,000 b/d in 2023, according to forecasts by the International Energy Agency (IEA). Meanwhile, the war in the Middle East had a moderate effect on oil prices.

Global oil markets are preparing to face serious headwinds and challenges in 2024. Analysts expect abundant supply due to a slowdown in economic activity combined with rising US production. The IEA predicts an increase in global oil demand next year, as it highlighted in its latest report

Goldman Sachs cut its forecast, estimating that Brent would average between $80 and $81. This forecast converges with the IEA’s, which predicts that Brent will average $82.57 a barrel in 2024. Barclays is still higher, predicting that oil will average $93 in 2024, while S&P Global estimates that $85 is more appropriate.

The best trend to watch to better understand the outlook for oil prices in 2024 is the state of the global economy, as oil demand is synonymous with economic activity. Global economic indicators remain fragile with the possibility of a recession.

Learn how to trade ETFs and start trading now by opening a live trading account with IG

Here are our top 5 oil ETFs to follow for the month of January 2024:

  1. US Brent Oil Fund

  2. iShares US Oil Equipment & Services ETF

  3. Lyxor STOXX Europe 600 Oil & Gas UCITS ETF

  4. Vanguard Energy ETF

  5. Fidelity MSCI Energy Index ETF

Discover the different types of ETFs

Leave a Comment