If you were anything but an oil bear during Monday’s trading session, you were definitely in a world of hurt. Oil prices fell into negative territory for the first time on record as West Texas Intermediate crude oil futures expiring in May spiraled down 321%.
“Basically, bears are out for blood,” said Naeem Aslam, the chief market analyst at AvaTrade. “The steep fall in the price is because of the lack of sufficient demand and lack of storage place given the fact that the production cut has failed to address the supply glut.”
“The bottom line is that there is no doubt that oil prices are way oversold at the current level, but given the circumstances, it is likely that the price may continue to fall further because the rig count hasn’t touched its bottom yet,” Aslam added.
With the bears out in full force, here are a few ETFs to play the weakness in oil:
- DB Crude Oil Double Short ETN (NYSEArca: DTO): offers 2x daily short leverage to the broad-based Deutsche Bank Liquid Commodity Index-Oil, making it a powerful tool for investors with a bearish short-term outlook for crude oil futures and Treasury bills. Investors should note that DTO’s leverage resets daily, which results in a compounding of returns when held for multiple periods. DTO can be a powerful tool for sophisticated investors but should be avoided by those with a low-risk tolerance or a buy-and-hold strategy.
- ProShares UltraShort Bloomberg Crude Oil (NYSEArca: SCO): offers 2x daily short leverage to the broad-based Dow Jones-UBS Crude Oil Sub-Index, making it a powerful tool for investors with a bearish short-term outlook for crude oil. Investors should note that SCO’s leverage resets on a daily basis, which results in a compounding of returns when held for multiple periods. SCO can be a powerful tool for sophisticated investors but should be avoided by those with a low-risk tolerance or a buy-and-hold strategy.
For more market trends, visit ETF Trends.
