On Monday, the United States Oil Fund (NYSEArca: USO), which tracks West Texas Intermediate crude oil futures, fell 6.0% while the United States Brent Oil Fund (NYSEArca: BNO), which tracks Brent crude oil futures, dropped 4.1%. Meanwhile, WTI futures was down 5.4% to $31.8 per barrel while Brent crude was 4.3% lower to $34.4 per barrel.
On the other hand, aggressive bearish traders are capitalizing on the misfortune through inverse ETF options, including the ProShares UltraShort Bloomberg Crude Oil (NYSEArca: SCO), which tries to reflect the two times inverse or -200% daily performance of WTI crude oil, and DB Crude Oil Double Short ETN (NYSEArca: DTO), which also follows a -200% performance of oil, jumped 17.4%. Lastly, the VelocityShares 3x Inverse Crude (NYSEArca: DWTI) takes the three times inverse or -300% performance of crude oil. On Monday, SCO increased 11.9%, DTO jumped 13.3% and DWTI surged 18.7%.
“China is the last standing consumer of oil outside of the U.S.. The problem is that everyone is relying on them,” Carl Larry, director of business development at Frost & Sullivan, told Reuters. “As long as we keep in this scenario where China is the only real consumer to pick up the pace, we’re going to see moves lower every time China has an issue with their economy.”
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Max Chen contributed to this article.