There are reasons for investors to be cautious with volatile energy ETFs. Moreover, if oil prices falls to new lows and the shale industry is unable to turn a profit, the highly leveraged industry may find it harder to repay debt obligations.
With the U.S. dollar strengthening and the Federal Reserve looking at tightening its monetary policy, the various U.S. market sectors and related exchange traded funds could behave differently in a strong USD environment.
“Calls on USO shares rising above $20 by mid-January represent the largest block of open interest in the fund’s options. The last time the shares were at $20, U.S. crude was touching $60 a barrel. On Wednesday, U.S. oil futures were trading at $47.62 a barrel,” according to Reuters.
United States Oil Fund