For now, Weinberg argues that the supply and demand fundamentals have not improved, with economic data out of he U.S. and China suggesting weakening demand and supply remaining elevated, especially as Iran and Libya work on pumping more into the global market.
“The supply and demand situation is quite bleak at the moment,” Weinberg added. “At the moment, the market is more thinking in terms of the prices, than concentrating on fundamentals.”
Consequently, ETF investors may be back to inverse options as a way to hedge or capitalize on the fall in oil. For instance, the United States Short Oil (NYSEArca: DNO) tracks the opposite moves of the West Texas Intermediate crude oil futures, DB Crude Oil Short ETN (NYSEArca: SZO) tracks the simple inverse of oil, ProShares UltraShort Bloomberg Crude Oil (NYSEArca: SCO) tries to reflect the two times inverse or -200% daily performance of WTI crude oil, DB Crude Oil Double Short ETN (NYSEArca: DTO) also follows a -200% performance of oil and VelocityShares 3x Inverse Crude (NYSEArca: DWTI) takes the three times inverse or -300% performance of crude oil. [Investors Capitalize on Oil Swings with Leveraged ETFs]
Some have already shifted into the inverse ETFs over April in anticipation of a pullback. For instance, DWTI attracted $136.1 million in net inflows and SCO brought in $67.1 million.
For more information on the oil markets, visit our oil category.
Max Chen contributed to this article.