Investors’ bets on rebounding crude prices come as the U.S. continues boosting production to the highest levels in multiple decades and after Saudi Arabia, the largest OPEC producer, pledged to keep pumping at robust levels even if prices keep falling.
Saudi Arabia’s surprising move to not defend oil prices has sent equity markets from Canada to Qatar tumbling and lower crude prices are seen as inching OPEC member Venezuela closer to a sovereign default as yields on the South American country’s debt blowout.
There are other signs investors doubt the efficacy of oil’s mini-rebound over the past few days. For example, the top asset gatherer among PowerShares ETFs over the past week is the PowerShares DB US Dollar Index Bullish Fund (NYSEArca: UUP). UUP, the U.S. Dollar Index tracking ETF, has added $54.3 million in new assets over the past week. Commodities are denominated in U.S. dollars and as a result, fall when the dollar rises.
PowerShares DB Oil Fund