Best, Worst Energy and Natural Resource Funds

Blame it on the weather. This year's unexpectedly calm hurricane season has made meteorologists seem more like economists. Now the weather system that held crude oil prices down from September through late November as unseasonably warm temperatures prevailed has buried half the country in a blanket of snow, and prices are headed higher again.

Bitterly cold weather increases power usage. The anticipation of additional demand pushed the price of crude oil up to $64.42 per barrel from its Oct. 31 low of $55.56 and sent the price of natural gas skyrocketing 130.03% to a four-month high of $8.35 per British thermal unit from just $3.63 back on Sept. 29.

This has been welcome news to energy and natural resource stocks. Over the five trading days ending Nov. 30, the S&P 500 slipped 0.39%. That index is divided into 147 different industry groups, and those in the energy sector captured five of the top six spots. Coal and consumable-fuel stocks lead the way, jumping 7.0%, with various oil and gas industries returning as much as 5.6%.

This made for a banner week for funds holding these winning stocks. As a group, the energy/natural resource sector funds that we rate rose 3.95% from their closing prices on Nov. 22 (the market was closed Nov. 23 for Thanksgiving) to the close of trading on Nov. 30.

The top performer on this week's list is (ENPIX Quote)ProFunds-Oil & Gas UltraSector. The fund is designed to target 150% of the total return of the Dow Jones U.S. Oil & Gas Index. Just over 80% of the fund is invested in oil and gas stocks, with 16.8% in oil and gas services stocks.

Exxon Mobil (XOM Quote), the largest holding at 21.2% of the fund's assets, rose 5.35% during the week, setting a new all-time high for the stock.

While not in the list of top 10 funds, Oil Services HOLDRS (OIH Quote) tacked on a total return of 4.29%, and the (BGR Quote)BlackRock Global Energy & Resource Trust rose 3.52% over the same period.

Crude Oil

Source: Bloomberg

Natural Gas

Source: Bloomberg

Top-Performing Energy/Natural Resource Sector Funds
Ticker	Fund	Rating	Fund Type	1 Week Total Return
ENPIX	ProFunds-Oil & Gas UltraSector Inv	C	Open-End	7.20%
QRABX	Oppenheimer Real Asset B	E-	Open-End	5.80%
FSNGX	Fidelity Select Natural Gas	C	Open-End	5.45%
PGNAX	JennDry Jennison Nat Resources A	C+	Open-End	5.17%
PCRAX	PIMCO Commodity Real Ret Str A	E+	Open-End	5.00%
XLE	SPDR Energy	A	ETF	4.94%
PSPFX	US Global Inv Global Resources	C	Open-End	4.85%
VDE	Vanguard Energy ETF	C-	ETF	4.79%
IYE	iShares Dow Jones US Energy	A+	ETF	4.74%
FRNRX	Franklin Natural Resources A	C+	Open-End	4.71%
Source: TheStreet.com Ratings

Back in September I identified these two funds, along with (VDE Quote)Vanguard Energy and Energy Select Sector SPDR(XLE Quote), both listed above, as opportunities to buy the sector during the period of short-term weakness. Since that article appeared, the Oil Services HOLDRS has returned a total of 15.83%, BlackRock Global Energy & Resource Trust is up 9.24%, Vanguard Energy is up 17.00% and Energy Select SPDR is up 16.03%. With energy prices still well off their August 2006 highs, the outlook for these four funds is still favorable.

Worst-Performing Energy/Natural Resource Sector Funds
Ticker	Fund	Rating	Fund Type	1 Week Total Return
FSLEX	Fidelity Select Environmental Portfolio	D-	Open-End	-1.95%
FMO	Fiduciary/Claymore MLP Opp	B-	Closed-End	-1.00%
ICBMX	ICON Materials	C+	Open-End	-0.39%
PBW	PowerShares Wilder Clean Energy	E-	ETF	0.28%
FSPFX	Fidelity Select Paper/Forest Portfolio	E	Open-End	0.78%
FEN	First Trust Energy Income & Growth	B+	Closed-End	0.79%
KYN	Kayne Anderson MLP	B+	Closed-End	1.00%
TYY	Tortoise Energy Capital	C	Closed-End	1.28%
GASFX	FBR Gas Utility Index Fund	A-	Open-End	1.75%
SBMBX	Saratoga Adv Tr Energy&Basic Mat A	D+	Open-End	2.87%
Source: TheStreet.com Ratings

Not all energy/natural resource funds were in the black this week, however. Four of the 10 worst performers, (FSLEX Quote)Fidelity Select Environmental Portfolio, (FSPFX Quote)Fidelity Select Paper/Forest Portfolio, (PBW Quote)PowerShares Wilder Clean Energy and (KYN Quote)Kayne Anderson MLP are making a second appearance, having debuted on a similar list we published on Oct. 28.

Fidelity Select Environmental Portfolio topped the list of worst performers. Its top holding, Waste Management (WMI Quote), at 13.0% of the fund's assets, dropped 2.6% to a seven-week low of $36.61, while Millipore (MIL Quote), the second-biggest holding an 8.2% of assets, fell fractionally and Ecolab(ECL Quote), the third biggest holding with 7.7% of assets, lost 3.6% amid selling by company insiders.

If energy prices do return to record high levels, the clean energy and environmental stocks are positioned to benefit as more of their products become financially viable. Look for these funds to rebound nicely if oil tops $75 a barrel.