The United States Oil Fund (NYSEArca: USO), which tracks West Texas Intermediate crude oil futures, has perked up in recent sessions, but the widely followed oil exchange traded product is still down nearly 24% year-to-date and finding traders bullish on the fund and the commodity is becoming increasingly difficult.
Data suggest traders are becoming more bearish on crude, potentially meaning USO and other oil ETFs face more downside.
OPEC is looking to reassert its dominance over global oil markets after realizing its recent production cuts did not have the desired impact because North American shale producers kept pumping, weighing on oil prices in the process.
Thanks to the shale boom, the U.S. is now a major oil exporter, which could threaten oil prices. In fact, China has become a major buyer of U.S. crude.
“Since the beginning of June, the long positions held by speculators have been liquidated and they have moved to scoop up short bets equivalent to 162 million barrels, almost a record high, according to the FT. The sudden bout of pessimism came after the market concluded that OPEC’s efforts, following the group’s late-May meeting in which it extended the production cuts for another nine months, would be insufficient in balancing the market,” reports ETF Daily News.