Energy-sector ETFs the only group to see $1 billion in weekly inflows as Suez Canal blockage and coming summer demand create favorable backdrop for oil
ETFstook in more than $1 billion in inflows this week, the only funds from a major sector to do so. Energyinflows accompanied some recovery in oilprices after they dropped into correction territory.
- Oil prices could stick to higher ground if a cargo ship stuck in the
Suez Canalremains lodged there for weeks.
Energy sector exchange-traded funds were the only group this week to add more than $1 billion in inflows as the cargo-ship blockage in the Suez Canal helped oil prices recover from their slump into correction territory.
Energy ETFs were a standout as flows to sector funds "fell prey to the general uncertainty" that ran through the week ended March 24, said EPFR, a subsidiary of Informa that provides fund flows and asset allocation data.
Four of the 11 major groups -- commodities, telecoms, technology and financial sector funds -- logged outflows for the week, according to a note issued Friday.
Investors pushed into energy sector funds "during a week when the blockage of the Suez Canal, the prospect of the North American spring and
Brent oil, the international benchmark, and West Texas Intermediate crude prices tracking US light, sweet crude this week fell into correction territory, with prices down 10% or more from recent highs.
Prices have since recovered some ground, with
Oil prices gained on expectations of tighter oil supplies while a cargo ship remains stuck in the Suez Canal, a key trade route that's used to transport crude and refined products and connects Europe to Asia. Analysts have said it may be weeks before the Ever Given, a nearly 200-foot-wide and 1,300-foot-long vessel, is dislodged from the canal.
"The blockage has impacted over 20 oil tankers and the longer this lasts, it should drive oil prices higher," Edward Moya, senior market analyst at Oanda, wrote in a note. Meanwhile, "Europe is slowly getting their vaccine rollout in order and that should trigger energy traders to price in an improved crude demand outlook by the summer," he said.
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