Crude oil-related exchange traded funds are continuing their downward spiral as the global supply glut distends on increased production out of the Organization of Petroleum Exporting Countries. 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.
Earlier this year, Goldman Sachs said a failure to quickly cut production now could drive oil prices to $20 per barrel.
“Demand is rising and supply is falling. Globally, the oil market will start drawing down on this year’s massive inventory builds around the middle of 2016, he estimates, which should help propel crude prices higher,” Bloomberg reports, citing Credit Suisse.
United States Oil Fund
