Is it spread along multiple months to alleviate contango issues? Knowing the composition is crucial for understanding the ETF’s price behavior. The largest oil industry ETF is the United States Oil Fund LP USO with over $3 billion in assets.

Stocks Mentioned

Some of the fund’s largest holdings are in the ProPetro Holding Corporation, the Keane Group Inc. and RPC Inc. The fund attempts to weight small-, mid- and large-cap stocks equally for a more diverse portfolio offering. Vanguard is known as 1 of the world’s most prolific providers of low-cost total market index funds, but the company also offers a number of industry-specific ETFs. OPEC+ had agreed to boost production amid fears of a global economic slowdown, which would drive down demand for oil. However, when tensions arose between Israel and Iran — a major producer of oil — investors began fearing supply issues. USO’s performance has recently turned positive, but it’s still the only one (at time of writing).

But if you’re just looking to gain exposure to oil, and to perhaps try to profit from its big swings, oil exchange-traded funds may be a better approach. The higher expense ratio for RSPG may be a worthwhile trade-off for investors looking to sidestep concentration risk and gain more balanced exposure to the sector. Finally, many of the largest energy companies have gotten incredibly lean and efficient in recent years. Energy ETFs are often viewed through a one-dimensional lens – primarily as a way to speculate on commodity prices. That makes sense at first glance, given the basic mechanics of how an integrated oil and gas company earns revenue. Oil prices are subject to market risk and can decline significantly.

Oil price ETFs will not as they track the price of the commodity through futures contracts or options. However, equity-based oil ETFs will pass through any dividends paid by oil drillers or exploration companies. ETFs (that’s exchange-traded funds, in case you’re new to this) give you a way to invest in the oil market without putting all your eggs in one basket. And because they’re traded like stocks, they’re easy to buy and sell on most platforms. Sarah Horvath is a seasoned financial writer with a specialization in investing content. With a keen eye for market trends and a deep understanding of investment strategies, Sarah delivers insightful and informative articles tailored to investors.

These Are Billionaires’ Favorite Energy Stocks

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Top Oil ETFs List

You’ll want to use the United States Oil Fund as only a small percentage of your overall portfolio — especially if you’re close to retirement. The Vanguard Energy ETF is a passively managed fund that tracks the MSCI US IMI Energy 25/50 index. The fund seeks to replicate the performance of the entire energy sector of the United States and doesn’t focus solely on oil investments. But the ETF’s largest holdings are in Exxon Mobil, Chevron and the Occidental Petroleum Corporation. These factors, coupled with evolving energy policies, create a dynamic landscape for oil investments. Oil exploration and production ETFs do not track the price of the commodity, rather, they are sector specific ETFs that hold stock of drilling and exploration companies.

• However, oil prices are inherently volatile, so consider your risk tolerance.
• This approach allows investors to make a directional bet on the price of oil without having to engage in futures trading or risk that an oil stock investment will underperform the price of crude oil.
• He holds the Certified ETF Advisor (CETF®) designation from The ETF Institute.
• The oil ETFs we track are commodities ETFs, meaning they track the price of oil through benchmarks such as the Brent Crude Oil or West Texas Intermediate benchmarks.
• They need to keep drilling, exploring and upgrading infrastructure to stay in the game.
• The higher expense ratio for RSPG may be a worthwhile trade-off for investors looking to sidestep concentration risk and gain more balanced exposure to the sector.

In fact, 6% of its holdings are best oil etf in Renewable Energy Group. But this ETF offers exposure to many small-cap oil and gas companies like SouthWestern Energy and Range Resources. The vast majority are futures contracts to buy and sell crude oil from corporations based in the United States. Picks are based on historical performance, expense ratios and more. Energy Information Administration, the United States used around 18 million barrels of oil every day in 2020.

These midstream companies pay reliable dividends and don’t get as rattled by oil price swings. Plus, AMLP handles the tax paperwork so you don’t have to. Below are 10 of the top oil ETFs you can invest in right now, whether you’re looking for broad exposure, price tracking, or juicy dividends. An oil EFT is a bundle of stocks that are related to the oil industry.

United States Oil Fund LP (USO)

This approach allows investors to make a directional bet on the price of oil without having to engage in futures trading or risk that an oil stock investment will underperform the price of crude oil. An oil & gas ETF is an exchange-traded fund that is designed to provide exposure to the oil and gas industry. These ETFs are specifically focused on tracking the performance of companies involved in the exploration, production, refining, marketing and distribution of oil and natural gas. A Oil & Gas ETF targets the exploration, production, or distribution segments of the petroleum and natural gas industry, sectors essential for global energy supply. It typically holds shares of companies ranging from integrated energy giants to equipment and service providers. These funds may be sensitive to commodity prices, and can add cyclical or inflation-sensitive exposure within diversified portfolios.

Best Fidelity ETFs to Watch in 2025

Try our ETF Screener or compare funds side by side with our ETF Comparison tool. Many, or all, of the products featured on this page are from our advertising partners who compensate us when you take certain actions on our website or click to take an action on their website. Here is a list of our partners and here’s how we make money. Still, this ETF remains a favorite thanks to its rock-bottom fees, deep liquidity and an available options chain for more advanced strategies.

It’s cheap to hold, packed with oil royalty, and tends to perform well when oil prices climb. Let’s face it, the oil market can be a right rollercoaster – prices up one minute, down the next, all depending on what OPEC’s had for breakfast. But despite the chaos, oil still powers our homes, cars, planes and global economy. So if you want a slice of the action without the hassle of picking individual companies, oil ETFs might be your ticket. UCO uses futures contracts across the New York Mercantile Exchange (NYMEX) and Intercontinental Exchange (ICE) exchanges to track the price of WTI. Investing in oil is typically reserved for advanced commodity traders — if you’re trying to invest in the commodity itself.

During the high-inflation, rising-rate environment of 2022, when most funds struggled, energy ETFs stood out as one of the few that posted gains. That’s because inflation tends to lift the input costs across the economy, including oil and gas. Historical performance provides insights into how the ETF responds to market conditions.

• Tony started investing during the 2017 marijuana stock bubble.
• To narrow the field, we focused only on broad energy sector ETFs, funds that provide diversified exposure across the entire oil and gas value chain.
• You’ll want to use the United States Oil Fund as only a small percentage of your overall portfolio — especially if you’re close to retirement.
• You can protect yourself against losses by making oil ETFs only a small percentage of your portfolio.
• Some of the biggest players in the energy sector today can trace their corporate roots directly to the 34 operating companies created by Standard Oil’s historic breakup.

To narrow the field, we focused only on broad energy sector ETFs, funds that provide diversified exposure across the entire oil and gas value chain. One drawback of the ETF is its relatively high expense ratio of 0.85%. The fees eat into the income that the fund’s holdings produce. However, the cost can be worth it because it lets investors own a basket of income-producing energy companies with a single investment. However, the fund has a rather hefty total expense ratio of 0.7%. The costs of rolling futures contracts can also eat into the fund’s return over the long term, causing it to lag the price of oil over longer periods.