Falling Gas Prices Could Provide Upside for This Bearish ETF

Falling gas prices should open opportunities for traders to place bearish bets on oil prices. If so, then bears can take a look at the Direxion Daily S&P Oil & Gas Exp. & Prod. Bear 2X Shares (DRIP) to double down on their bets.

Gas prices have been falling this holiday season, which is a plus for consumers who are busy travelling this time of year. Bets on higher oil prices have dissipated amid a global oversupply, resulting in a record losing streak.

“US oil futures notched their seventh straight week of declines on Friday (Dec. 8), marking their longest losing streak in five years,” reported CNN.

Just before the start of the holiday season, prices have been steadily declining despite potential supply disruptions from the Organization of the Petroleum Exporting Countries (OPEC) possibly limiting production in 2024. Additionally, China’s struggles with its economic growth are also affecting demand, which could mean further downward pressure on oil prices.

“You’ve seen where we were maybe a bit undersupplied on the crude oil for a while, supporting higher prices,” said Corey Stewart, Americas oil analysts at LSEG. “And as we moved out of the traditional driving season when we’d see more crude runs, it was only natural for prices to come down a little bit.”

All that said, it could simply be par for course as oil prices trend lower toward the end of 2023.

“A fall towards the end of the year is not necessarily surprising, as we move probably from an undersupply to a slight oversupply in the crude oil market here in the near term,” added Stewart. “It looks dramatic, and it is, but I think you can see how this will play out based on seasonality.”

Oil Trading Made Easy

DRIP seeks daily investment results that equal to 200% of the daily performance of the S&P Oil & Gas Exploration & Production Select Industry Index. It offers traders an option to play oil prices with leverage without resorting to futures contracts or a margin account.

If oil prices trend higher in the short term, then there’s the Direxion Daily S&P Oil & Gas Exp. & Prod. Bull 2X Shares (GUSH). OPEC’s attempts to try and stymie the oversupply with production cuts could help prop up prices on the news, but whether it will be enough in the long run is anyone’s guess.

“Record-breaking supply from the United States, Brazil and Guyana, and sharply higher Iranian oil production, along with easing demand, prompted some OPEC+ members to announce more extensive 100 2 1Q24 cuts to fend off a potential inventory build,” the International Energy Association said.

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