The Organization of Petroleum Exporting Countries (OPEC) and its allied members could implement supply cuts in December, which should give oil traders a holiday season worth celebrating. OPEC will meet in Vienna between Dec. 5-6 to discuss output, and early indications are that supply cuts could be on the way.
As such, oil prices rose on Wednesday as a weaker dollar and traders covering their short positions ahead of an industry report gave U.S. and Brent crude a boost. Per a CNBC report, “OPEC Secretary-General Mohammad Barkindo has said deeper output cuts are an option. On Tuesday, he said OPEC would do what it could with allied producers to sustain oil market stability beyond 2020. OPEC, Russia and other producers have agreed to cut oil output by 1.2 million barrels per day until March 2020.”
“You did see the OPEC secretary general say OPEC could act to keep the market stable, and if we come back under pressure again we might see that again,” said Gene McGillian, vice president of market research at Tradition Energy in Stamford, Connecticut.
Oil plays include 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). Traders looking to play broad energy exposure can use the Direxion Daily Energy Bull 3X Shares (NYSEArca: ERX) for bullish plays.
Weaker Dollar, Gold Traders Holler
As for the dollar weakening, more interest rate cuts through the rest of the year is also giving gold traders an opportunity to rejoice. In addition, further volatility in the equities market could spark more allocations into precious metals.
“The dollar is getting whacked right now. It is pushing into territory we haven’t seen since a month ago,” said Joshua Graves, senior market strategist at RJO Futures. “If that continues to sell off, that will continue to boost oil prices.”
Leverage-hungry traders who want to play gold exchange-traded funds (ETFs) can look to short-term plays via funds like the Direxion Daily Gold Miners Bull 3X ETF (NYSEArca: NUGT) rise. Additionally, short-term traders can also play the gold market through miners via the VanEck Vectors Gold Miners (NYSEArca: GDX) and the Direxion Daily Jr Gold Miners Bull 3X ETF (NYSEArca: JNUG).
Investors who are not looking for leverage can use non-leveraged funds like the SPDR Gold MiniShares (NYSEArca: GLDM). In addition, investors can also look at SPDR Gold Shares (NYSEArca: GLD) as a means to adding precious metals to a portfolio certainly speaks to the diversification benefits of gold, among other things.
For more relative market trends, visit ETFtrends.com.