Volatile price moves in oil that could cause stomach-churning, rollercoaster-like oscillations could be behind us, according to oil expert Rusty Braziel.
Braziel’s comments come after drone attacks in Saudi Arabia last week saw oil prices soar on supply disruption fears. The attacks were enough to cause U.S. President Donald Trump to announce that emergency oil reserves were at-the-ready if necessary.
“When you look at how much resiliency that there is built into the marketplace, I think most of the market assumes that if prices go up, the U.S. and other countries will respond,” said Braziel, president and principal energy markets consultant at RBN Energy.
While Braziel didn’t dismiss short-term movements in oil prices, he was reluctant to say the trend would spill over into long-term trends.
“It may take a little time, so prices may spike in the short term, but not the long term. That forward curve still is on the downhill slide,” he said, referring to futures prices for oil.
Braziel cited political tensions in Venezuela as a case-in-point scenario where the expectation of big price moves in oil didn’t happen.
“A lot of people thought oil was going to go up when Venezuela was going to hit the wall,” said Braziel, who has worked in the oil industry for more than 30 years, including a stint as a Texaco executive. “Gee, that didn’t exactly happen that way, did it?”
Couple that with the latest news that Saudi Arabia could restore oil production by early next week and you have a case where short-term price moves in oil is the best traders can expect.
“Put all that together, and [the price per barrel]was just not going to hang up there the way people thought,” Braziel explained.
Oil ETFs to Play
Oil bears can look to the Direxion Daily S&P Oil & Gas Exploration & Production Bear 3X ETF (DRIP) for inverse opportunities. For bulls looking to buy on the weakness can look to the United States 3x Oil (NYSEArca: USOU), ProShares UltraPro 3x Crude Oil ETF (NYSEArca: OILU) and the Direxion Daily S&P Oil & Gas Exp. & Prod. Bull 3X Shares (NYSEArca: GUSH).
Two additional funds for traders to consider are the Direxion Daily Energy Bull 3X Shares (NYSEArca: ERX) for bullish plays and the Direxion Daily Energy Bear 3X Shares (ERY) for bearish opportunities to take advantage of.
For investors who can’t stomach the large movements of leveraged ETFs, there are the United States Oil Fund (NYSEArca: USO) and the United States Brent Oil Fund (NYSEArca: BNO) funds to consider if they want to get in on the oil action this week.
For more market trends, visit ETF Trends.