5 Leveraged Oil Plays that are Gushing Strong Year-to-Date Returns
This article was originally published on ETFTrends.com.
Indications that oil supply could be tightening have continued to send oil prices on their upward trajectory, which have benefitted leveraged exchanged-traded products tied to the commodity's price. Currently, the price of WTI Crude stands at $72 and Brent Crude at just under $82, but the idea of $100 oil prices have already entered into the realm of possibilities by the end of this year.
Earlier this week, U.S. President Donald Trump prodded the Organization of the Petroleum Exporting Countries (OPEC) to ramp up production levels in order to temper oil prices ahead of mid-term Congressional elections.
"The market and certainly the U.S. president is saying to OPEC and Saudi Arabia: 'Show me the barrels,'" Herman Wang, OPEC specialist at S&P Global Platts, told CNBC's "Street Signs" on Friday.
"And Saudi Arabia and OPEC have kind of turned around and said: 'Well, show me the demand,'" Wang added.
Source: tradingeconomics.com
Here are five oil-focused, leveraged exchanged-traded products that have been generating sizeable returns for investors thus far this year.
1. United States 3x Oil (USOU)--62.01%YTD
The investment 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 (the “Benchmark Oil Futures Contract”) less the fund’s expenses. 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” (for WTI Crude Oil futures).
2. VelocityShares 3x Lng Crude Oil ETN New (UWT)--56.34%YTD
The investment seeks to replicate, net of expenses, 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.
3. UBS ETRACS ProShares Dly 3x Lng Crud ETN (WTIU)--52.04% YTD
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. ProShares UltraPro 3x Crude Oil ETF (OILU)--50.66%YTD
The investment 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.
5. Barclays Inverse US Treasury Aggt ETN (UCO)--37.67% YTD
The investment seeks to provide daily investment results (before fees and expenses) that correspond to twice the daily performance of the Bloomberg WTI Crude Oil SubindexSM. The “Ultra” funds seek results for a single day that match (before fees and expenses) two times (2x) the daily performance of a benchmark. It does not seek to achieve their stated objective over a period greater than a single day. The Bloomberg WTI Crude Oil SubindexSM is designed to track crude oil futures prices.
Related: Fed Projects at Least Three More Rate Hikes in 2019
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