Oil And Gas ETFs Are Jumping, But Why?

Have we somehow traveled back in time to this time last year? Rising gas and oil prices are the talk of the town, and related exchange traded funds (ETFs) are moving skyward. What’s going on? Oil has hit $60 a barrel for the first time in six months. While that’s a far cry from the record $147.27 hit last July 8, the price spike is getting attention because inventories are still very high.

The prices are also rising in part because of the U.S. dollar, which has been weak, Reuters says. China also plays a part - the country is the world’s second-largest energy user. They said that crude imports in April rose to their second-highest daily rate on record.

Oil hit a low of $32.70 in January.

But there could be more threats to higher prices down the line, too. Non-profit research organization RAND says that the greatest threat to U.S. oil imports is a long-term disruption of the world supply and the higher costs associated with that loss, reports Erwin Seba for Reuters.

The United States imports nearly three-fifths of its oil. The report from RAND said that a large and extended drop in the supply would send prices skyrocketing, and significantly impact the United States, regardless of how much it imports.

• United States Oil (USO): up 14.8% in the last two weeks

Meanwhile, gas prices are also rising ahead of the busy summer season. In the last week alone, they’ve gone up more than 16 cents nationwide, reports The LA Times.

While the rising prices might have some biting their nails, they’re still much lower than they were last year. At this time in 2008, the national average was $3.72, compared with $2.24 today. One analyst says this recent activity shouldn’t scare anyone into thinking that we’ll see another march toward $5 a gallon this year.

• United States Gasoline (UGA): up 18.8% in the last two weeks

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