The United States Oil Fund (NYSEArca: USO) has climbed 14.4% this month, but that has not been enough to keep some investors around.
USO is bleeding assets despite rising to the highest levels of the year. From April 1 through April 28, USO lost $564.6 million in assets, putting the fund on pace for its biggest monthly outflows since April 201, reports Moming Zhou for Bloomberg.
Due to the sudden interest in futures-backed oil ETFs, observers argue that retail speculators have been a major factor in supporting the energy markets. Retail investor flows into oil ETFs have been the “key force pushing commodity markets higher,” Goldman Sachs commodity research team said in a note. [ETFs Dominate Oil Futures Market]
Investors have departed USO as volatility has ebbed. “The CBOE Crude Oil Volatility Index, which measures oil price fluctuations using options of the U.S. Oil Fund, slipped to 36.6 on April 24, the lowest since December,” according to Bloomberg.
April is historically one of the strongest months for crude oil with the commodity posting an average gain of 2.5% in the fourth month of the year.
Through April 23, annualized 90-day volatility for the S&P GSCI Crude Oil Total Return Index, which serves as the underlying benchmark for the iPath S&P GSCI Crude Oil Total Return Index ETN (NYSEArca: OIL), is at its highest levels since the late stages of the global financial crisis in early 2009, according to S&P Dow Jones Indexology. [Volatility Chases Investors From Oil ETFs]
Not all oil ETFs have been stung by outflows. For example, the United States 12 Month Oil Fund (NYSEArca: USL) and the United States Brent Oil Fund (NYSEArca: BNO) have attracted a combined $15.2 million in fresh investments this month.
USL is less volatile than USO because its net asset value reflect changes of the price of WTI Crude Oil delivered to Cushing Oklahoma as measured by changes in percentage terms of the price of an average of the next 12 month’s WTI. USL is up 10.4% this month.
Some investors are going the opposite, betting that oil has run too far too fast with inverse oil funds. For example, the ProShares UltraShort Bloomberg Crude Oil (NYSEArca: SCO) and the VelocityShares 3x Inverse Crude (NYSEArca: DWTI) have seen combined April inflows of $181 million.
United States Oil Fund
