Oil ETFs are in a nasty three-day tailspin on very heavy trading volume with U.S. crude futures shedding more than $8 a barrel so far this week.
Rising oil supplies and talk Saudi Arabia is pushing the commodity’s price lower were hitting the ETFs on Wednesday.
It’s been a volatile week for oil ETFs. On Monday afternoon, U.S. Oil Fund (NYSEArca: USO) followed the violent move lower in crude futures amid speculation of an algorithmic trading glitch and a potential release of the U.S. Strategic Petroleum Reserve. [Oil ETF Plunge Blamed on Rapid-Fire Trading, Reserve Speculation]
USO is the largest ETF tracking oil futures with $1.2 billion in assets under management. The oil fund is down more than 7% so far this week.
On Monday, the ETF slammed into resistance at the 200-day simple moving average as trading volume surged. The fund slipped below the 50-day moving average on Wednesday for the first time since July.
Similarly, volume in PowerShares DB Oil Fund (NYSEArca: DBO) jumped off the charts Wednesday. DBO was on track to trade more than 10 times its normal daily volume.
With more than two hours left in the session, DBO traded more than 3.1 million shares. The average daily volume for the past three months is about 340,000 shares.