Crude oil markets continue to witness their worst crash in years, as markets are rapidly approaching $20 a barrel in West Texas Intermediate crude, with predictions of as low as $10 a barrel to come.
Saudi Arabia and Russia are still locked in a price war, which is drastically affecting markets, amid already tender stocks in the wake of the coronavirus panic. Russia refused to cut production, in an effort to suffocate America’s high-cost shale producers with cheap crude oil. Saudi Arabia responded by slashing prices and elevating production in what is precisely the opposite of what is needed to balance the market, as oversupply is now rampant.
“With each day there seems to be yet another trapdoor lying beneath oil prices,” Louise Dickson, an analyst at Rystad Energy, wrote in an emailed comment. “What we are seeing here is essentially the atomic bomb equivalent in the oil markets.”
“Crude has become a bigger problem for markets than the coronavirus,” Adam Crisafulli, founder of Vital Knowledge, said earlier this month. “It will be virtually impossible for the [S&P 500] to sustainably bounce if Brent continues to crater,” he added.
So which ETFs stand to gain as oil continues to fall? The ProShares UltraShort Bloomberg Crude Oil ETF (SCO), the DB Crude Oil Double Short ETN (DTO), and the ProShares Daily 3x Inverse Crude ETN (DNO) are all funds that allow investors to play the downside of the oil market. Year-to-date, SCO has gained almost 174%, up 11.6% just Tuesday.
For more market trends, visit ETF Trends.