ETF Trends
ETF Trends

The crude oil and related exchange traded funds are heading toward a seasonally strong period, but the global glut may have thrown a wrench into the normal rhythm of the energy market.

The United States Oil Fund (NYSEArca: USO), which tracks West Texas Intermediate oil, dipped 2.6% Tuesday and was relatively flat over the past week. WTI crude oil futures were down 2.9% to $48.5 per barrel.

Meanwhile, inverse oil options rose Tuesday. For instance, the United States Short Oil (NYSEArca: DNO), which tracks the opposite moves of the West Texas Intermediate crude oil futures, increased 2.4%. The DB Crude Oil Short ETN (NYSEArca: SZO), which also tracks the simple inverse of oil, gained 3.7%. [Investors Capitalize on Oil Swings with Leveraged ETFs]

Additionally, the ProShares UltraShort Bloomberg Crude Oil (NYSEArca: SCO), which tries to reflect the two times inverse or -200% daily performance of WTI crude oil, jumped 5.0% Tuesday. The DB Crude Oil Double Short ETN (NYSEArca: DTO), which also follows a -200% performance of oil, increased 5.2%. Lastly, the VelocityShares 3x Inverse Crude (NYSEArca: DWTI), which takes the three times inverse or -300% performance of crude oil, surged 8.9%. [Inverse ETF Plays for a Bearish Oil Outlook]

ETF traders have been anticipating a continued fallout in oil prices, funneling a net $111.4 million into SCO year-to-date, according to ETF.com data. DWTI also attracted $97.3 million in inflows so far this year.

Looking at historical trends going back both 20- and 30-years, the oil market should be heading into a typically strong period from March through May after the seasonal lows in January through mid-February, writes technical analyst J.C. Parets, founder and president of Eagle Bay Capital.

Crude oil historically averaged a 3.5% and 2.5% return in March and April.

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