Leveraged Oil ETN Makes Another Round of Accommodations

Oil is in the midst of a two-week winning streak and that’s prompting some traders to revisit the energy sector. As a result, RexShares is again upsizing the MicroSectors U.S. Big Oil Index 3X ETN (NRGU).

The Solactive MicroSectors U.S. Big Oil Index, NRGU’s underlying index, is an equal dollar weighted index designed to track the prices of the 10 U.S. stocks in the oil/energy sector with the largest free-float market capitalization.

Index constituents are Anadarko Petroleum (APC), ConocoPhillips (COP), Chevron (CVX), EOG Resources (EOG), Marathon Petroleum (MPC), Occidental Petroleum (OXY), Phillips 66 (PSX), Pioneer Natural Resources (PXD), Valero Energy (VLO), and ExxonMobil (XOM).

“Bank of Montreal has increased the aggregate principal amount and total notes outstanding of the MicroSectorsTM U.S. Big Oil Index 3X Leveraged ETN by $150 million, to a new total of $725 million, and 14.5 million notes, respectively,” according to RexShares.

Gaining Steam

This is the third upsizing of NRGU in about a month, indicating active traders are embracing the triple-leveraged ETN.

“NRGU is the only daily resetting 3x leveraged exchange traded product with exposure to the U.S. Oil and Energy equity sector in the United States,” according to MicroSectors.

Consumers have been largely confined to their homes with shelter-in-place orders throughout much of the country in an attempt to stem the spread of the coronavirus pandemic, which has damaged demand for gasoline and oil. But with many states now exploring plans to reopen their territories, investors and analysts are enthusiastic that a recovery in oil will occur, as consumers move toward potential normalcy.

NRGU’s bearish counterpart is the MicroSectors U.S. Big Oil Index -3X Inverse ETN (NYSEARCA: NRGD).

“The month of April 2020 was historic for the oil markets, with the WTI Crude Oil front-month futures contract in negative territory for the first time ever. In this environment, traders may have looked to take leveraged positions in energy-related companies that might benefit from the rebound in oil prices,” said REX Shares founder and CEO Greg King.

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The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.