Oil Price Volatility Should Give Traders Plenty Opportunities

For traders, one of the perks of trading oil prices is the push-pull of supply and demand forces. Those force open opportunities to play the volatility. Direxion Investments has two leveraged ETFs to add to a trader’s toolbox to capitalize on bullish or bearish intuitions on oil prices.

Production data will continue to play a role in the direction of oil prices through the end of 2023 and beyond. Investing.com reported that, in a few weeks, the U.S. Energy Information Administration will release oil inventory data following a system upgrade.

Additionally, more data from the American Petroleum Institute indicated a weekly build of just over 1 million barrels, which comes after a build of 12 million barrels the previous week. This saw oil prices retreat and the byproduct has resulted in less pain at the pump.

“An increase in stocks of such a size from the world’s biggest producer raises fears that the United States could be close to peak production for crude, while demand slips following the end of the main summer driving season,” reported Investing.com.

Nonetheless, the Organization of Petroleum Exporting Countries and International Energy Agency don’t expect demand to soften. Both organizations expect demand to stay elevated in the two largest economies, the U.S. and China. That should help offset supply.

“The IEA revised up its 2023 oil demand growth forecast by around 100Mbbls/d to 2.4MMbbls/d,” said analysts at ING. “This increase was a result of Chinese demand hitting record levels, while US demand has also been stronger than the agency was expecting.”

Additionally, cooling inflation should also put pressure on oil prices as the greenback continues to retreat following a recent U.S. Fed rate pause. Demand in the U.S. and China will help buoy prices. But global demand in other parts of the world could cause some concern.

That said, there’s enough forces weighing down or propping up oil. That should give traders plenty of opportunities in oil prices.

Be a Bull or Bear on Oil Prices

As oil prices rise, bullish traders can consider the Direxion Daily S&P Oil & Gas Exp. & Prod. Bull 2X Shares (GUSH). The fund 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.

For more news, information, and strategy, visit the Leveraged & Inverse Channel.