{"id":57044,"date":"2023-09-05T07:47:27","date_gmt":"2023-09-05T11:47:27","guid":{"rendered":"https:\/\/ifintechworld.com\/news\/oih-the-bullish-trend-continues\/"},"modified":"2023-09-05T07:47:33","modified_gmt":"2023-09-05T11:47:33","slug":"oih-the-bullish-trend-continues","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=57044","title":{"rendered":"OIH: The Bullish Trend Continues"},"content":{"rendered":"
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Oil and gas services are the products and processes that support and enhance the industry\u2019s ability to extract hydrocarbons from the earth\u2019s surface and process them into fuels and other products. Oil services firms explore, transport, process, and deliver energy assets to market. Generally, oil services companies manufacture, repair, and maintain equipment used in crude oil extraction and transportation.<\/span><\/p>\n

The factors determining profitability for the oil services sector are industry capex budgets, rig and well counts, day rates, equipment orders, and backlogs. As of September 6, 2023, the S&P 500 Energy Select Sector SPDR (XLE) at $90.77 was 3.8% higher than the December 30, 2022, closing level. The XLE was 297% higher than the March 2020 $22.88 per share bottom.<\/p>\n

Over the same periods, at $350.41, the VanEck Oil Services ETF was 15.2% higher than the 2022 closing level and 431% above the $66.00 2020 low. Oil services companies in the OIH have outperformed the integrated oil companies that make up the XLE since the 2020 lows and in 2023.<\/span><\/p>\n

Higher lows and higher highs since March 2020 – A reverse split in April 2020<\/strong><\/h2>\n

The 2020 global pandemic caused markets across all asset classes to fall to multi-year and, in some cases, all-time lows. NYMEX crude oil futures dropped below zero for the first time since trading began in the early 1980s, and the VanEck Oil Services ETF (NYSEARCA:OIH<\/span>) product followed to its lowest price since its listing when it reached a bottom at $66 per share. On April 20, OIH Split History underwent a one-for-twenty reverse spilt. Since the March 2020 low, OIH has made higher lows and higher highs.<\/p>\n

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Ten-Year Chart of the OIH ETF Product (Barchart)<\/span><\/p>\n<\/figcaption><\/figure>\n<\/p>\n

The chart highlights OIH\u2019s bullish pattern, taking the ETF 432.5% higher to the most recent $351.46 high on August 9. At just below the $350 level on September 5, OIH remains in a bullish trend.<\/p>\n

OIH owns shares of the leading oil services companies – Higher oil prices mean more business<\/strong><\/h2>\n

OIH\u2019s fund profile states:<\/p>\n

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Fund Profile for the OIH ETF (Seeking Alpha)<\/span><\/p>\n<\/figcaption><\/figure>\n<\/p>\n

The most recent top holdings include:<\/p>\n

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Top Holdings of the OIH ETF (Seeking Alpha)<\/span><\/p>\n<\/figcaption><\/figure>\n<\/p>\n

As the chart shows, OIH had 39.5% of its assets invested in the three leading international oil services companies: Schlumberger (SLB), Halliburton (HAL), and Baker Hughes (BKR).<\/p>\n

At $349.68 per share on September 5, OIH had $2.57 billion in assets under management. OIH trades an average of over 560,000 shares daily and charges a 0.35% management fee.<\/p>\n

The average dividend yield of the S&P 500 SPY ETF is 1.45%. OIH pays shareholders a lower $2.89 yearly dividend, equating to 0.83%. As of September 1, 2023, the SPY was 18% higher in 2023, while OIH had gained 15%. However, since the March 2020 lows, OIH was 432.5% higher compared to a 106.7% increase in SPY.<\/p>\n

Meanwhile, on September 1, the XLE integrated oil company ETF was 296.6% higher than the 2020 low, as OIH outperformed the XLE over the past years.<\/p>\n

Rising oil prices are bullish for OIH and other oil-related assets. After trading to a $130.50 per barrel high in March 2022, nearby NYMEX crude oil corrected 51.3% to $63.57 in May 2023. Since then, the price rallied to the $85.55 level on September 1, a 34.6% gain from the May 2023 low.<\/p>\n

The factors supporting oil and oil services – OPEC+, U.S. and European energy policies, China and India, and inflation<\/strong><\/h2>\n

Higher crude oil prices since the May 2023 low support increased profits for the integrated petroleum and oil-related companies, and oil services are no exception. The following factors support higher oil prices in September 2023:<\/p>\n