Related: Oil ETFs: Worse, Not Better, as OPEC Cuts Back
Technological improvements and greater efficiency has helped U.S. shale producers pump out crude oil at lower margins – some say it is now profitable at less than $50 per barrel. Additionally, companies are finding easy access to credit and private-equity firms have bought out struggling companies, which have kept production flowing.
“In the near-term, however, the sentiment of hedge funds is very important. Hedge funds are now holding the lowest net-long position in nearly a year, a sign of just how pessimistic they are about oil prices in the short run. Prices have declined by more than 15 percent since OPEC’s meeting a month ago. But the short bets continue to rise, which could push oil prices even lower – a sort of self-fulfilling prophecy,” according to ETF Daily News.
Active traders now have some new choices to profit from big moves in crude prices. ProShares rolled out the ProShares UltraPro 3x Crude Oil ETF (NYSEArca: OILU) and ProShares UltraPro 3x Short Crude Oil ETF (NYSEArca: OILD) debuted earlier this year.
For more information on the crude oil market, visit our oil category.