Nevertheless, energy ETFs have still attracted $5.4 billion in net inflows year-to-date, which suggests that the recent selling is attributed to some good old-fashioned profit taking. For instance, energy ETFs’ lost $475.8 million on May 1, a few days before WTI crude oil closed at this year’s high of $60.93 per barrel on May 6 after a 49-day rally. [Inverse ETFs to Hedge Against Hurdles Ahead]
“The hot money, the money that’s looking for short term trades, may have taken some of those gains,” Issakainen added. “I don’t make much more of it than people making tactical moves.”
Some oil market observers, though, argue that the energy sector could see further weakness as fundamentals remain unfavorable, with inventories reaching near their highest in over two decades. [Oil ETFs: Iraq, OPEC Maintaining Higher Exports]
“The fundamentals for quite some time haven’t supported the price rise we’ve seen,” Chris Johnson, a strategist at Macquarie Capital (USA) Inc, said in the article. “Uptick in demand has clearly not been in line with supply.”
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Max Chen contributed to this article.