Oil prices are continuing to gain momentum as fundamentals improve. On Tuesday, a report showed that inventories in the U.S. fell more than forecast last week, highlighting the fact that shale production is declining. Indeed, an overall drop in non-OPEC production is leading to a rebalancing of the global oil market.
Apart from decline in non-OPEC production, prices are also benefiting from supply outages in several producing countries. As the fundamentals for the oil market continue to improve, oil producers are expected to benefit. This is why Canadian investors should consider the BMO Junior Oil Index (ETF) (TSX: ZJO).
The ETF has been designed to replicate the performance of the Dow Jones North America Select Junior Oil Index. It seeks to invest in and hold the Constituent Securities of the Dow Jones North America Select Junior Oil Index. The fund’s top holdings include Diamondback Energy Inc., Vermillion Energy Inc., QEP Resources Inc., Seven Generations Energy Ltd., and Parsley Energy Inc.
In today’s trading, ZJO is up more than 2% as oil prices are up sharply on inventory data. Year-to-date, the fund has gained almost 13%. In the last three months though as oil prices have rallied, ZJO has gained more than 37%.
