U.S. Oil Fund (NYSEArca: USO) is down 8% the past month with WTI crude prices threatening to fall below $90 a barrel for the first time this year.
“Oil is going to remain under pressure for a while yet,” said Christopher Bellew, a senior broker at Jefferies Bache, in a Bloomberg report. “When prices were strong last month there was an influx of fresh speculative buying, and the opposite is happening now.”
USO and other oil ETFs have been under pressure on concerns U.S. spending cuts will weigh on the economy after Washington failed to reach a deal before the sequestration deadline. A strengthening dollar has also created a headwind for commodity ETFs.
Investors are the least bullish on commodities in nearly four years, according to a separate Bloomberg report.
Hedge funds and other large speculators cut net-long positions in commodities futures and options to the lowest level since the first quarter of 2009.
“Commodity markets are worried about China and are sensing possible trouble in the macro picture,” said Stanley Crouch, as chief investment officer at Aegis Capital, in the article. “Commodities may be out in front of a possible slowdown. The sentiment is changing to cautious.”
U.S. Oil Fund
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