Plenty of opportunity and challenges await when it comes to investing in crude oil exchange traded funds ahead of the upcoming Organization of Petroleum Exporting Countries (OPEC) meeting on May 25.
On the recent webcast, Drill Into the Future of Oil With Wall Street’s Top Geopolitical Analyst, Helima Croft, Managing Director and Global Head of Commodity Strategy Global Research at RBC Capital Markets, and Simeon Hyman, Head of Investment Strategy at ProShares, touched upon various factors that could affect the crude oil prices, including OPEC and policy changes, and looked to investment opportunities to potentially capitalize on the energy market.
In a survey of webcast participants, 71.3% said they anticipated that OPEC will roll the existing production cuts at its upcoming meeting. Of the other participants, 17.3% said OPEC will not roll the existing production cuts while 11.4% said OPEC will increase production cuts.
Croft said the economic incentive of the leaders of OPEC was to prevent another downturn in oil prices.
Advisors on the webcast were also asked whether or not if they had used crude oil exchange traded products, and if yes, what was their objective. Of the respondents, 19.9% said they did to capitalize on a forecast of crude oil pricing while 19.4% said did as a portfolio diversified. Fifty-five percent answered they had not used them while 3.8% selected other.
Hyman said the portfolio diversifier story is one that isn’t new anymore, adding a very healthy percentage of portfolios include commodities, especially oil, in long-term positions.