Core Viewpoint - Oil-focused ETFs are experiencing pressure due to OPEC+'s announcement to increase production, raising concerns about an oversupplied market [1][2]. Group 1: ETF Performance - The United States Oil Fund (USO) and United States Brent Oil Fund (BNO) fell over 5% in the past week as speculation about OPEC+'s production increase grew [2]. - Leveraged products like ProShares Ultra Bloomberg Crude Oil (UCO) saw larger losses, down about 10% in the past week, reflecting their amplified exposure to crude price movements [3]. - Equity-based funds such as the Energy Select Sector SPDR Fund (XLE) and VanEck Oil Services ETF (OIH) were more insulated, losing around 1.7% during the same period, with companies like ExxonMobil and Halliburton expected to benefit from increased drilling activity [4]. Group 2: Geopolitical Risks - The OPEC+ production increase occurs amid rising geopolitical tensions, with potential U.S. secondary sanctions on China for importing Russian crude, similar to actions taken against India [5]. - Investors may seek to reduce exposure to geopolitical risks by considering globally diversified resource ETFs like SPDR S&P Global Natural Resources ETF (GNR) and FlexShares Global Upstream Natural Resources ETF (GUNR) [5]. Group 3: Market Outlook - As oil markets adjust to the upcoming supply increase, ETF investors may need to shift strategies, with futures-heavy funds likely facing continued challenges, while equity-based or globally diversified funds may provide more stability in the coming months [6].

Core Insights - Elliott Investment Management has significantly increased its exposure to the energy sector, raising its allocation from 23.84% to 37.64% in Q1 2025, making it the firm's largest sector allocation [1][4]. Company Investments - Elliott has made a substantial investment of nearly $2 billion in Phillips 66 and Suncor Energy Inc., which are now among the fund's top three holdings [2]. - The firm increased its stake in Phillips 66 by nearly 2,000%, acquiring 14.95 million new shares, bringing the total to 15.73 million shares valued at approximately $1.94 billion, which now represents 12.81% of Elliott's $15.2 billion 13F portfolio [3]. - Suncor Energy remains a core holding with a stake valued at $2.04 billion, representing 13.46% of the portfolio, unchanged from the previous quarter [4]. Strategic Shifts - The increase in energy positions coincides with a reduction in exposure to broader market ETFs and sectors, including a more than 25% cut in the SPDR S&P 500 ETF put position and reduced bets against energy sector ETFs [4]. - This strategy reflects a tactical shift towards direct investments in traditional energy companies like Phillips 66 and Suncor, contrasting with broader market hesitations regarding peak oil demand and ESG pressures [5].