Welcome to Bloomberg ETF IQ. I'm Scarlet Fu. Katie greifeld is off today.Let's get to the biggest stories right now in the trillion dollar global ETF industry. Stocks and oil holding steady even as Iran rejects a proposed cease fire, while a deadline from President Trump to open the Strait of Hormuz looms. And we dive deep into the Vaneck oil Refineries ETF as it outperforms energy funds during this now six week long war with Iran.And as Bitcoin hovers right around $70,000, we look at the next generation of ...

Core Insights - Investors have significantly increased their investments in energy stock ETFs, with approximately $13 billion flowing into U.S.-listed energy equity ETFs this year as oil prices approach their highest levels since 2022 [1] - The Energy Select Sector SPDR Fund (XLE) and the Vanguard Energy ETF (VDE) have seen substantial inflows, with XLE attracting $5.1 billion and VDE about $1 billion [1] - Energy stocks have outperformed the broader market, with XLE and VDE up about 39%, while the S&P 500 has experienced a 5% loss, making energy the best-performing sector this year [2] Investment Performance - Although energy stock ETFs have not matched the gains of oil futures ETFs, which are up 70% and 79%, respectively, they have still delivered strong returns [2] - The SPDR S&P Oil & Gas Exploration & Production ETF (XOP) has gained over 47% this year, followed by the VanEck Oil Services ETF (OIH) with a 45% return, and the Portfolio Building Block Integrated Oil & Gas Exploration & Production ETF (PBOG) up 40% [6] Market Dynamics - Energy stocks constitute only about 4% of the broader U.S. stock market, limiting their impact on overall market ETFs, which are affected more by larger sectors like technology and financials [4] - Investors looking to increase their exposure to energy can utilize ETFs like XLE and VDE, which provide different levels of market exposure [4] ETF Characteristics - XLE is market-cap weighted and heavily concentrated in Exxon Mobil and Chevron, which together account for over 40% of the fund [7] - XOP is equal-weighted, giving smaller energy companies more influence on returns, while OIH focuses on oil services firms [8] - PBOG offers a global approach, including major international energy companies alongside Exxon and Chevron [8] Investment Strategies - Investors have various options to express a bullish view on energy, whether seeking broad U.S. sector exposure, a focus on smaller producers, a bet on oil services companies, or a more global portfolio [9]

Core Viewpoint - The surge in oil prices has significantly outperformed other commodities like silver and gold, with oil ETFs showing remarkable gains this year, driven by geopolitical tensions and market dynamics [1] Group 1: Oil ETF Performance - Four of the five top-performing actively traded commodity ETFs are oil-focused, with United States Brent Oil (BNO) and United States Oil (USO) both up 53.1% year-to-date [1] - In contrast, the iShares Silver Trust (SVL) has only gained 24% this year, highlighting the stark difference in performance between oil and precious metals [1] - The S&P 500, including dividends, has returned less than 1% this year, indicating a stagnation in broader stock performance compared to the energy sector [1] Group 2: Investment Strategies - Investors are advised to increase their energy exposure as only 3.5% of the S&P 500 is allocated to the energy sector, primarily in large integrated oil companies [1] - The United States Oil ETF, with $2.1 billion in assets, is highly responsive to oil price changes and is recommended for short-term trading [1] - For long-term positions, diversified energy ETFs like State Street Energy Select Sector SPDR (XLE) are suggested, which include major companies like Chevron and Exxon Mobil, as well as oil services and drilling firms [1] Group 3: Market Dynamics and Risks - The geopolitical situation, particularly the conflict with Iran, has altered the risk profile for energy-related ETFs, leading to extreme divergence from the rest of the market [1] - Industry ETFs such as VanEck Oil Services (OIH) are positioned to benefit from a potential global drilling boom, with significant returns of over 39% this year [1] - Investors should remain cautious as oil prices can decline rapidly due to policy changes or resolution of geopolitical tensions, making certain ETFs more suitable for short-term trading rather than long-term holds [1]

Core Insights - U.S. gasoline prices are projected to decline by 6% in 2026, providing relief to consumers but posing challenges for oil companies [1] - Goldman Sachs anticipates a downward trend in global oil prices this year due to a supply-driven market surplus, despite geopolitical risks maintaining price volatility [2] Price Decline Factors - The expected decline in gasoline prices is primarily driven by falling crude oil prices, with Brent crude projected to average around $56 per barrel in 2026 due to a supply wave from long-cycle projects [5] - Decreasing U.S. refinery capacity, particularly on the West Coast, may offset some effects of lower crude oil prices, potentially benefiting remaining refiners while dampening domestic demand due to increasing fuel economy and robust EV sales [6] Impact on Energy Companies - Integrated oil majors like Exxon Mobil and Chevron may experience margin pressure due to lower realized oil prices, while refining companies such as Marathon Petroleum and Valero Energy could benefit from resilient or expanding crack spreads [7] Investment Strategy - The current geopolitical tensions and trade disputes add complexity to the energy investment landscape, making broad Energy ETFs more attractive than individual stocks as they provide a buffer against localized disruptions [8][9] - Investors in Energy ETFs are likely to remain protected against short-term market upheavals due to the diversified nature of many constituent companies, which have significant investments in low-carbon energy resources [10] Energy ETFs Spotlight - **State Street Energy Select Sector SPDR ETF (XLE)**: AUM of $29.35 billion, exposure to 22 companies, top holdings include XOM (23.99%) and CVX (18.00%), gained 7.2% over the past year [12][13] - **Vanguard Energy ETF (VDE)**: Net assets of $7 billion, exposure to 107 companies, top holdings include XOM (22.87%) and CVX (15.02%), rallied 6.8% over the past year [14][15] - **iShares Global Energy ETF (IXC)**: Net assets of $2 billion, exposure to 50 companies, top holdings include XOM (18.86%) and CVX (10.84%), soared 13.3% over the past year [16] - **VanEck Oil Refiners ETF (CRAK)**: Net assets of $69.3 million, exposure to 30 refining companies, top holdings include PSX (7.57%) and VLO (6.66%), surged 40.7% over the past year [17]

Core Viewpoint - The U.S. Energy Information Administration (EIA) forecasts a 13% increase in Alaska's crude oil production by 2026, marking the highest output since 2018 and the most significant annual growth rate since the 1980s [1][7]. Production Drivers - The increase in oil production is attributed to large-scale projects transitioning from planning to production, notably ConocoPhillips' Nuna project and Santos' Pikka Phase 1 project [3][4]. - ConocoPhillips' Nuna project is expected to reach a peak capacity of 20,000 barrels per day (bpd) [3]. - The Pikka Phase 1 project is anticipated to start in early 2026 and peak at 80,000 bpd, contributing nearly 20% of Alaska's total production in 2025 [4]. Impact on Major Oil Companies - Major oil companies like ConocoPhillips and ExxonMobil will benefit from increased revenues and cash flows due to the production surge [2][6]. - ConocoPhillips, as the dominant producer in Alaska, is well-positioned to gain from its multiple projects, including Nuna and the future Willow development [6][7]. Energy ETFs and Investment Opportunities - The projected increase in oil production serves as a catalyst for the U.S. energy sector, potentially boosting earnings and share prices of key companies [7]. - Investors may consider energy ETFs for diversified exposure to the growth in Alaska's oil production, particularly those with significant holdings in ConocoPhillips and ExxonMobil [8][9]. Specific Energy ETFs - **State Street Energy Select Sector SPDR ETF (XLE)**: AUM of $27.87 billion, with XOM at 23.21% weight and COP at 6.77% weight; YTD gain of 9.8% [10]. - **Vanguard Energy ETF (VDE)**: Net assets of $7.1 billion, with XOM at 23.01% weight and COP at 5.52% weight; YTD gain of 9.5% [12]. - **Fidelity MSCI Energy Index ETF (FENY)**: Net assets of $1.3 billion, with XOM at 21.9% weight and COP at 5.70% weight; YTD gain of 9.7% [13].