Crude Oil Rebounds After Worst Day In Years | ETF Trends
Crude oil is bouncing back Friday, up 3% after its worst day in more than four years on Thursday. Crude oil tanked on Thursday on trepidation that the global economy would weaken further after President Donald Trump terminated a tariff ceasefire with China. The president said additional tariffs of 10% on the remaining $300 billion in Chinese goods would be added in September.

West Texas Intermediate Crude Oil dropped 7.9% to $53.95, breaking a 5-day winning streak with its worst daily performance in more than 4 years, with ETFs like the United States Oil Fund (USO), the VelocityShares 3x Long Crude Oil ETN (UWT), and the ProShares Ultra Bloomberg Crude Oil (UCO) following suit, down more than 6%, more than 18%, and more than 12.25% respectively.

 “The oil market has been the highest hit asset around from the trade war and this only exacerbates the situation,” said John Kilduff Founding Partner of Again Capital.

“It was a rough day for oil even before the tweet came out,” said Kilduff. “The oil markets didn’t get help from the stance the Federal Reserve took yesterday and then got hurt by the president’s announcement.”

Brian Stutland from Equity Armor Investments commented, “ I think more importantly is what it means for supply because I think people freaked out originally, what would that mean for the Iranian sanctions and and how China responds with a run on that. Could more supply come to the market through their vehicles and what not. So that’s what freaked oil. I think it’s rebounded back because I think cooler heads are prevailing a bit. When you look at the demand picture, we’re not collapsing to negative globally GDP growth here. So I think the demand picture is still there enough to support oil. Yes maybe it trades lower here in the low 50s, but I expect it to hold the low 50 area.“
Since oil is a fundamental constituent of gasoline, some experts see oil getting a boost from gasoline consumption as well.
 Anthony Grisanti from GRZ Energy added, “It’s gasoline demand. Half a barrel of crude oil is made into gasoline. And that the man has been running about 200,000 barrels a day less than what it did last year at this time. I would say Oil could get back about $58 but it certainly not going to go above 62 or 63 this year without some major supply disruption.”
Investors looking at riding a new wave up in crude could look into ETFs mentioned above like USO, UCO, or even UWT, for a more aggressive stance.
For more market trends, visit ETF Trends.