Canada’s oil sector has come under pressure since the middle of 2014 due to a sharp pullback in oil prices. The cost of extracting oil from Canada’s unconventional fields is significantly higher than extracting oil from conventional fields in the Middle East. Not surprisingly, North American oil & gas producers have had to announce production cuts. However, the oil market is showing signs of recovery as major producers feel that the price has now gone down to unsustainable levels.
Major producers are expected to meet later this month in Russia to discuss possible production freeze to help stabilize prices. While a full recovery in the oil market is going to take a while considering that the market is still oversupplied, production freeze will mean that the market will bottom. This might be a good time to consider ETFs such as Horizon’s BetaPro NYMEX Crude Oil Bull Plus ETF (TSX: HOU) and BMO Junior Oil Index ETF (TSX: ZJO).
HOU seeks daily investment results equal to 200% the daily performance of the NYMEX light sweet crude oil futures contract for the next delivery month. The ETF is down 22% this year.
ZJO has been designed to replicate the performance of the Dow Jones North America Select Junior Oil Index. The ETF is down almost 4% this year.
