Leveraging oil and gas investments the past year has proven to be a profitable strategy for Direxion Daily S&P Oil & Gas Exp. & Prod. Bull 3X Shares (NYSEArca: GUSH), which has been eponymously gushing returns for investors the past year–up 94.96% and 33.81% year-to-date–according to Yahoo! Finance performance figures.
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GUSH seeks daily investment results equal to 300% of the daily performance of the S&P Oil & Gas Exploration & Production Select Industry Index. GUSH has been able to achieve its performance figures by investing at least 80% of its net assets in securities, ETFs and other financial instruments that provide daily leveraged exposure to the index.
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Leveraging investments by 300% has allowed GUSH to stay above its 200-day moving average of $29.52 since mid-April.
It will be interesting to see how their strategy evolves, particularly when oil prices are starting to come off their highs. Crude oil prices touched the $75 mark last week, but have fallen about 10%, settling to a price of $68.06 as of 2:15 p.m. ET.
Oil’s choppy trading s of late has largely been the result of a mix of geopolitical forces and supply disruptions. In addition to the ongoing trade wars roiling the capital markets, supply disruptions in Venezuela continued as two of the country’s four crude upgraders will undergo maintenance the next few weeks.
Furthermore, the markets have been receiving mixed signals regarding supply. Factors such as the U.S. possibly tapping into emergency reserves from its Strategic Petroleum Reserve and whether Libya can rebound from its own oil production levels amid military clashes continue to confound oil traders.
Additionally, U.S. Treasury Secretary Steve Mnuchin backed off earlier Iranian sanctions that were intended to cut Iran oil purchases to zero or face stiff U.S. sanctions. Mnuchin announced that oil buyers who were unable to meet the Nov. 4 deadline to trim Iranian crude purchases to zero would receive an extension.
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“It’s sort of like a piling on now at this point in terms of increased production from the Saudis, from the Russians, from Libya,” said John Kilduff, founding partner at energy hedge fund Again Capital. “We’ve just gone through support levels like a hot knife through butter, $70 and now $68. The main level really now is that $64 low from last month,” he told CNBC.
For more market trends affecting oil ETFs, visit ETFTrends.com.