Crude oil prices have surged past $100 per barrel, marking a 20% increase since July, with diesel fuel hitting a record high of $6.23 per gallon. The rise coincides with the ongoing closure of the Strait of Hormuz, a critical channel for oil transport.
In response to the volatile energy market, investors are flocking to closed-end funds (CEFs), averaging an 8.5% distribution rate. Notably, the BlackRock Energy & Resources Trust (BGR) offers a 6.7% distribution yield, primarily investing in major firms such as Exxon Mobil and Chevron. Another option, the Adams Natural Resources Fund (PEO), with a 7.4% distribution rate, includes exposure to both energy and basic materials. Currently, PEO trades at an 8% discount to net asset value, slightly better than its five-year average.
Several other CEFs also focus on energy infrastructure, with the Neuberger Energy Infrastructure and Income Fund (NML) yielding 7.8% and the ClearBridge Energy Midstream Opportunity Fund (EMO) yielding 7.9%. Both funds carry discounts to NAV of about 8%, aligning with their historical averages. Tortoise Energy Infrastructure (TYG) has a notably higher yield of 12.9% but trades at a much smaller discount than its historical norm.
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