Popular interest in energy exchange traded funds (ETFs) is on the rise and an ETF provider has responded by launching a new fund in order to capture the short side of oil.

Oil today is trading above the $67 a barrel mark on a resumption of weakness in the U.S. dollar, reports Ikuko Kurahone for Reuters. Oil prices are going to be closely watched in the coming weeks and months as investors watch for both signs of inflation and a signal as to where the greenback could be headed.

United States Commodity Funds, the same provider of that natural gas ETF you’ve been hearing so much about, recently launched the United States Short Oil Fund (NYSEArca: DNO), with an expense ratio of 0.6%, reports Don Dion for TheStreet. DNO is an inverse ETF product that will try to reflect percentage changes of the spot price of light, sweet crude oil delivered to Cushing, Oklahoma, as tracked by price changes of the benchmark futures contract in the New York Mercantile Exchange.

Potential investors should note that commodity futures are volatile, and the fund is more speculative and includes a higher degree of risk.

The fund may eventually be subject to new regulatory changes imposed by the Commodity Futures Trading Commission (CFTC) that are expected to be announced this fall. DNO will likely face creation limits, which could curtail the fund if it attracts too much investor demand. So far, the new ETF has attracted a strong showing of investor interest.

DNO should reflect the returns of the United States Crude Oil Fund (NYSEArca: USO) on a one-day basis, but the returns may diverge over the long-term because of compounding, according to IndexUniverse.

The new ETF’s main competitor is the PowerShares DB Crude Oil Short ETN (NYSEArca: SZO). SZO differs in that it owns out-month contracts instead of DNO’s front-month futures contract. SZO compounds its returns on a monthly basis.

For more stories on oil, visit our oil category.

Max Chen contributed to this article.

Tags: Commodity ETFs, DNO, Energy, Long-Short ETFs, New ETFs, Oil, SZO, USO