This article was originally published on ETFTrends.com.
Thus far in 2018, adding higher oil prices to leveraged exchange-traded products (ETPs) has created a combination of combustible profits for traders. As such, leveraged oil plays have had bullish traders gushing as oil prices continued their ascent on the latest supply data from the U.S. Energy Department.
The department reported that U.S. crude inventories were higher by 6.3 million barrels last week, which was more than the 3.7 million increase expected based on a Reuters poll. In addition, gasoline stocks fell 4.8 million barrels to 229.33 million, which was its lowest level since December 2017.
"The headline number was a little bearish on crude but with the drop in gasoline supplies and an uptick in refinery runs, the market is holding in there pretty good," said Phil Flynn, analyst at Price Futures Group in Chicago.
The other top performer in the list benefitted from the rise of the U.S. dollar. With the greenback gaining, being bearish on precious metals like silver has produced stellar returns for traders.
Here are five commodity ETPs that have yielded the highest returns thus far this year.
1. United States 3x Oil (USOU): 44.61%YTD
USOU seeks the daily changes in percentage terms of its shares’ per share NAV to reflect three times the daily change in percentage terms of the price of a specified short-term futures contract on light, sweet crude oil. USCF will endeavor to have the notional value of the fund’s aggregate exposure to the Benchmark Oil Futures Contract at the close of each trading day approximately equal to 300% of the fund’s NAV. The Benchmark Oil Futures Contract is the futures contract on light, sweet crude oil as traded on the NYMEX, traded under the trading symbol “CL."
2. VelocityShares 3x Inverse Silver ETN (DSLV): 41.31% YTD
DSLV, the only leveraged product on the list not tied to oil, seeks to replicate three times the opposite (inverse) of the S&P GSCI Silver index ER. The index comprises futures contracts on a single commodity, and the fluctuations in the values of it are intended generally to correlate with changes in the price of silver in global markets.
With interest rates rising, the dollar has been following its lead as capital outflows from gold and silver have taken the shine off precious metals.
3. UBS ETRACS ProShares Dly 3x Lng Crud ETN (WTIU): 38.32% YTD
With WTIU, the 3X long securities provide a daily long leveraged exposure to the performance of the Bloomberg WTI Crude Oil Subindex ERSM. The index is designed to measure the return from a rolling long position in WTI crude oil futures contracts that trade on major U.S. exchanges.
4. VelocityShares 3x Lng Crude Oil ETN New (UWT): 37.54%YTD
UWT seeks to replicate three times of the S&P GSCI® Crude Oil Index ER. The index tracks a hypothetical position in the nearest-to-expiration NYMEX light sweet crude oil futures contract, which is rolled each month into the futures contract expiring in the next month. The value of the index fluctuates with changes in the price of the relevant NYMEX light sweet crude oil futures contracts.
5. ProShares UltraPro 3x Crude Oil ETF (OILU): 35.66%YTD
OILU seeks to return a multiple (3x) of the performance of the Bloomberg WTI Crude Oil Subindex for a single day. The fund seeks to meet its investment objective by investing, under normal market conditions, in futures contracts for WTI sweet, light crude oil listed on the NYMEX, ICE Futures U.S. or other U.S. exchanges and listed options on such contracts.
For more market trends, visit ETFTrends.com
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