Oil prices climbed further Tuesday, with Brent crude rising 1% to $97.95 a barrel and briefly touching $99.46, according to the Associated Press. The benchmark has climbed from around $72 over the past two months. Fighting tied to the war with Iran has clouded hopes for reopening the Strait of Hormuz to tankers.
Key Takeaways:
- Brent crude topped $97 a barrel, up from around $72 two months ago, on Middle East supply fears.
- Crescent Energy and Northern Oil and Gas, NDIV’s top two holdings, both beat quarterly earnings estimates.
- AngloGold Ashanti and Petrobras have surged this year on higher gold and oil prices.
Wall Street felt the pressure. The S&P 500 fell 0.4% and the Dow Jones Industrial Average dropped 520 points Tuesday morning, the AP reported. The Nasdaq composite slipped 0.3% and the 10-year Treasury yield held at 4.78%, its highest level since fall of 2023.
This rally offers a real-time test for funds built to capture stock gains and options income from energy markets. The Amplify Energy & Natural Resources Covered Call ETF (NDIV) has returned 40.8% year to date, more than double the 17.4% average for its ETF Database Materials category.
See more: XLE Tops August Sector Rankings as Energy Stocks Surge
Inflation data due later this week, including reports on wholesale and consumer prices, could move markets further, the AP reported. Economists expect Thursday’s wholesale report to show a 5.4% pace, up from 4.7% in July.
Friday’s consumer inflation reading should ease to 3.3%, still above the Federal Reserve’s 2% target. Traders see a 58% probability of a Fed rate hike after the September 16 meeting, according to CME Group data.
The Stocks Riding the Oil Rally
The fund is built partly as an inflation hedge, pairing dividend-paying energy and natural resource stocks with monthly covered calls to target 10% or more in total annualized income, according to Amplify. Holdings are weighted by dividend yield and capped at 5% of assets at each monthly rebalance.
That structure means that the sector’s strongest recent performers now sit at the top of the portfolio. Crescent Energy Co. (CRGY) and Northern Oil and Gas, Inc. (NOG) are each about 6% of assets, according to ETF Database. AngloGold Ashanti (AU), Petróleo Brasileiro (PBR), or Petrobras, and Noble Corp. (NE) round out the top five.
Its two largest positions are telling a similar story. Crescent Energy topped Wall Street’s second-quarter estimates, with revenue up 55.3% year over year, according to the company’s results. Northern Oil and Gas beat estimates too, with free cash flow jumping 400% from the prior quarter.
Not all of NDIV’s gains are tied directly to crude. AngloGold Ashanti’s second-quarter earnings rose 58% as gold prices climbed 35%. Shares gained 26% in a single week last month. Petrobras, by contrast, posted record output of 3.34 million barrels of oil equivalent per day. Its shares are up more than 74% this year, ahead of Exxon Mobil and Chevron, according to each company’s results.
Higher energy prices are lifting more than upstream producers. Noble Corp., an offshore driller, has landed $1.3 billion in new rig contracts since January. That includes its first deal in Norway’s harsh-environment floater market, the company said.
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