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Oil ETFs: WTI-Brent Spread


The observable “spread” between the prices of WTI Crude Oil and Brent Oil has been well documented in the markets media for the past several years, and the spread itself continues to widen at current levels with some analysts seeing an ultimate near term ratio above 30.

Linked ETFs have also been active, as BNO (United States Brent Oil Fund, Expense Ratio 0.94%) traded a multiple of its average daily volume yesterday on a steep drop.

Crude prices across the board took a hit yesterday, and the bloodletting continues today on a “gap” down in Crude Oil prices. BNO remains rather unrecognized by the marketplace, as the fund has only attracted about $39 million since inception in 2010 and it averages about 36,000 shares on an average daily basis.

The fund uses underlying Brent Oil futures in attempts to reflect the daily changes of Brent spot, and the fund is structured as an ETF, not an ETN.

Two other ETFs exist in the “Brent” space, UOIL (VelocityShares 3X Long Brent Crude ETN, Expense Ratio 1.35%) and DOIL (VelocityShares 3X Inverse Brent Crude ETN, Expense Ratio 1.35%), but both are extremely small in terms of assets
under management and average daily trading volume.

BNO will likely see greater than normal activity as it hits more radars, and more importantly if crude oil prices continue to slide lower in the near term as they are today (BNO trading at its lowest levels since late January and traded as low as $85.07 this morning).

United States Brent Oil Fund


For more information on Street One ETF research and ETF trade execution/liquidity services, contact Paul Weisbruch at pweisbruch@streetonefinancial.com.