Oil ETFs Rally on Election Day

Maybe equity-based oil ETFs are rallying today because oil futures are surging. Or maybe these funds are just joining in on an Election Day rally for the broader market. Perhaps oil ETFs are telling traders something else, that being being who the victor in today's presidential election will be.

It is a stretch, but the reality is expectations are in place that that oil ETFs will move higher if Republican challenger Mitt Romney defeats President Obama.

The tea leaves of oil ETFs might be implying that is what is going to happen. The Market Vectors Oil Services ETF (NYSE:OIH) is up 1.1 percent on volume that is already close to the daily average with three hours left in the trading session. Getting in on the act are the SPDR S&P Oil & Gas Exploration & Production ETF (NYSE:XOP) and the Energy Select Sector SPDR (NYSE:XLE), both of which are up more than one percent as well.

At least one new energy ETF is seeing some upside today as well. The Market Vectors Unconventional Oil & Gas ETF (NYSE:FRAK), which debuted in February, is up 0.4 percent today. FRAK has been mentioned as a possible beneficiary of a Romney win because the Republican has vocally supported efforts to tap into more domestic sources of oil and natural gas.

Occidental Petroleum (NYSE:OXY) and EOG Resources (NYSE:EOG) are FRAK's second- and third-largest holdings, respectively, and those companies only extract oil and gas from onshore locations.

In the essence of fairness, it should be noted some alternative energy ETFs are building on decent Monday performances. For example, the Guggenheim Solar ETF (NYSE:TAN) is up 2.5 percent while the PowerShares Global Wind Energy ETF (NASDAQ:PWND) is higher by 0.7 percent. Given President Obama's commitment to solar and wind power, those funds could rally tomorrow should he win a second term.

For more on election ETFs, click here.