The oil and natural gas sector is heating up. Besides oil prices, what else should we watch?

This round of rising oil and natural gas sectors was directly triggered by significant fluctuations in international oil prices. However, many investors have also noticed that the performance of oil and natural gas ETFs does not always move in perfect sync with international oil prices. The core reason is that their underlying assets are different.

International oil prices generally refer to WTI or Brent crude futures prices, which are commodity assets. Their prices mainly reflect current supply and demand conditions. For example, when regional tensions escalate or transportation routes are blocked, the market worries about short-term supply disruptions, and crude futures tend to react quickly. Therefore, oil prices mainly reflect short-term, immediate supply and demand changes.

In contrast, oil and natural gas ETFs invest in a basket of stocks of companies involved in the oil and gas industry chain, which are equity assets. Take the Invesco Oil & Gas ETF (159588; OTC Link A: 021822, C: 021823) as an example. It tracks the CSI Oil & Gas Index, covering two main sectors: oil and natural gas. This includes upstream resource companies such as China National Petroleum Corporation, Sinopec, China National Offshore Oil Corporation, as well as natural gas distribution and storage companies like XinAo Holdings and Jiufeng Energy. Besides being affected by oil prices, these assets are also influenced by broader market sentiment, capital flows, industry valuation, and company fundamentals. Their pricing anchors tend to be more aligned with medium- to long-term oil price expectations rather than short-term price spikes.

This can also be confirmed by the oil futures term structure. Recently, near-month crude futures have shown significantly larger gains than longer-dated contracts, indicating that the market currently perceives this shock as a short-term disturbance rather than a complete rewrite of long-term logic. According to the latest assessments from overseas institutions, if the conflict eases in a short period, the overall impact on inflation and growth should be manageable; however, if it prolongs, the effects could significantly amplify.

This also means that when looking at oil and natural gas themes, one should not focus solely on the daily fluctuations of international oil prices. Instead, it is more important to monitor whether this supply disruption will further transmit to the earnings of listed companies and have a substantial impact on their long-term profitability.

It is important to note that the performance of oil and natural gas sectors is influenced by multiple factors and carries certain uncertainties. Geopolitical developments, OPEC+ production policy adjustments, non-OPEC supply changes, and other factors can all cause volatility in the sector. Investors should recognize the differences between commodity price fluctuations and stock asset performance, maintain a rational view of short-term market volatility, and be aware of investment risks.

Invesco Oil & Gas ETF (159588) FAQ:

Q: Why does international oil price surge not necessarily lead to a corresponding rise in oil and natural gas ETFs?

A: Because international oil prices are commodity prices mainly reflecting current supply and demand, while oil and natural gas ETFs are equity assets whose prices are more anchored to medium- and long-term oil price expectations, company profitability, and overall market risk appetite. Therefore, their movements are not always perfectly synchronized.

Q: When focusing on oil and natural gas themes, what should be the main points of attention?

A: Focus on four indicators: first, OECD commercial inventory changes, which are strongly indicative of oil price movements; second, the spread between near- and far-month oil futures, reflecting whether market shocks are perceived as short-term or long-term; third, OPEC+ production policies and non-OPEC supply increases; fourth, the actual impact of geopolitical tensions on transportation routes.

Q: What are the differences in net asset value performance between connection funds (e.g., 021822, 021823) and ETFs (e.g., 159588)?

A: ETFs are traded on the secondary market and track indices relatively closely. Connection funds participate through subscription and redemption processes. When large subscriptions occur, due to relevant regulations and procedures, the capital entering the fund cannot immediately be used to build positions. During this period, the fund’s size increases but the proportion of holdings may passively decline, potentially causing tracking errors. Additionally, connection funds need to hold some cash to handle daily redemptions, which can also lead to tracking deviations. Investors should fully understand the product features and view short-term tracking errors rationally.

The above analysis is for reference only and does not constitute investment advice. The market carries risks; please invest cautiously.