United States Commodity Funds (USCF), the issuer of popular commodities exchange traded funds such as the United States Oil Fund (NYSEArca: USO) and the United States Brent Oil Fund (NYSEArca: BNO), is planning an exchange traded product that focuses on Canadian oil.
California-based USCF is working with Auspice Capital Advisors, Ltd. (Auspice), a Canada-based alternatives fund manager, to develop an ETF that tracks the price movements of the Canadian Crude Excess Return Index (CCIER).
Related: The Worst Could be Over for Oil ETFs
That index “was created by Auspice to mirror the returns investors would receive if they held an approximately 3-month rolling fixed price position in the nearby Western Canadian Select futures contracts, including rolling and rebalancing. The CCIER is closely related to Auspice’s Canadian Crude Index (CCI), a benchmark that provides a reference price for the bulk of the crude oil produced and traded in Canada (ticker CDNCRUDE). Both are published and calculated by the New York Stock Exchange (NYSE),” according to a statement issued by Auspice and USCF.
After lagging over the past couple of years, oil ETFs such as BNO and USO, have helped drive the commodities complex higher in 2016.
[related_stories]Fundamentals are improving in the energy market. For example, U.S., India and other major consumers are seeing increased demand, the Wall Street Journal reports. On the supply side, U.S. shale production has fallen off in response to the collapsed prices, and producers like Nigeria and Canada have experienced disruptions.
Related: Oil ETFs at 7 Month High on Falling U.S. Inventories
OPEC has kept up production to pressure high-cost rivals, such as the developing U.S. shale oil producers. The International Energy Agency expects it will take several years before OPEC can effectively price out high-cost producers.
“Canadian crude oil is a natural complement to our suite of oil funds, which include the U.S. benchmark (WTI) and the global benchmark (Brent).” USCF offers access to WTI via the United States Oil Fund (USO) and Brent via the United States Brent Oil Fund (BNO),” said John Love, President and CEO of USCF, in the statement.
For more information on the oil market, visit our oil category.