Oil Tops $111 for Three Days; Two Oil ETFs Terminate

April 16th at 2:00pm by Tom Lydon

Terminator It’s "termination day" for a couple of oil exchange traded funds (ETFs).

Last week, we reported that the MacroShares Oil Down (DCR) and MacroShares Oil Up (UCR) would terminate if the price of oil reached or passed the price of $111 for three straight days.

We’re here: on Monday, oil closed at $111.75. Tuesday, it closed at $113.30. Today, it closed at $114.93.

The last trading day for the funds will be June 25, reports Matthew Hougan for Index Universe. On June 30, shareholders of record will receive payouts based on the fund’s net asset value (NAV). If the price of oil reaches or surpasses $120 a barrel by then, holders of UCR would get $40 per share (each share is valued at one-third the price of a barrel of oil) and holders of DCR wouldn’t receive anything.

Oil briefly topped a record $115 after supply concerns arose, reports John Wilen for the Associated Press. Gas inventories fell by 5.5 million barrels last week, according to the Energy Department’s Energy Information Administration, and it was a bigger drop than analysts had been expecting. Crude oil inventories also fell last week by 2.3 million barrels, instead of the increase that had been expected.

Gas demand has dropped off, falling 1% a week for the last four weeks. One analysts says it would normally be rising at this time of year as the travel season begins picking up. But at a record $3.39 a gallon, suddenly staying home and watching the Travel Channel is looking like a much better bargain.

If you aren’t crying yet, this may move you to: Charles Maxwell, the "Dean of Energy Analysts" predicts $180 oil by 2015 and $300 by 2020, reports Aaron Task for Tech Ticker.

Other ETFs available to hedge oil and gas are:

  • United States Oil (USO), up 20.6% year-to-date
  • PowerShares DB Oil Fund (DBO), up 21.2% year-to-date
  • United States Gasoline (UGA), up 7% since Feb. 28 inception

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.

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