2 ETFs to Play the Ebb and Flow of Oil Prices

In the shadow of a big tech market rally lurks oil prices, which have been rallying as equities take a breather in August and September. However, push and pull forces could make for a bumpy ride for prices, giving traders opportunities to take advantage of leveraged exchange-traded funds (ETFs).

Since the start of 2023, oil prices have been trending lower, but the longer-than-expected run for inflation could be spilling over into oil. Prices have started to trend higher again, especially during the summer time when travelling reaches a peak.

While market analysts could foresee a scenario where oil could reach $100 per barrel, there are also downward pressures that could play into weaker oil prices. That’s welcome news for consumers who have been seeing a profound increase in the price of fuel.

“Oil prices may be near $100 a barrel, but a range of factors could prevent a sustained rally above that level, analysts say,” a Reuters report said, noting that a rise in non-OPEC production could apply pressure on prices, specifically “Russia’s need to boost supply to increase revenue and the potential for oil demand to slow given already-high interest rates in major Western economies.”

Reuters Graphics
Reuters Graphics

2 Oil Options for Bulls and Bears

As mentioned previously, the rise of energy prices only adds to the wall of worry for consumers. The U.S. Federal Reserve acknowledged this as they anticipate additional rate hikes in order to to try and tame stubborn inflation.

“If energy prices increase and stay high, that’ll have an effect on spending, and it may have an effect on consumer expectations for inflation, things like that. That’s just things that we have to monitor,” said U.S. Federal Reserve chair Jerome Powell.

In the meantime, as oil prices rise, bullish traders can consider the Direxion Daily S&P Oil & Gas Exp. & Prod. Bull 2X Shares (GUSH). GUSH seeks daily investment results of 200% of the daily performance of the S&P Oil & Gas Exploration & Production Select Industry Index.

If oil prices subside, bears can take a look at the Direxion Daily S&P Oil & Gas Exp. & Prod. Bear 2X Shares (DRIP) to double down on bearish bets. The fund goes in the opposite direction of GUSH, seeking daily investment results of 200%, or 200% of the inverse (or opposite), of the performance of the S&P Oil & Gas Exploration & Production Select Industry Index.

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