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Surging Crude Prices Lift Oil ETFs


With Crude Oil prices skyrocketing since the end of June, the largest ETP that tracks the commodity’s prices, USO (United States Oil Fund, Expense Ratio 0.45%) saw notable options flows on Friday.

August 37.50 put buyers surfaced in good size, and it is possible that a holder of the underlying ETF is simply locking in gains given the greater than 8% rally in USO in the past month, if not a bearish speculator looking for Oil prices to take a breather here.

ETPs that track crude oil prices are still not terribly large in terms of overall asset sizes in the context of assets invested across all ETPs, as USO for instance has $1.4 billion in AUM and is the largest in the category.

Other notable “trackers” of Oil prices include DBO (PowerShares DB Oil Fund, Expense Ratio 0.79%) which has raised $374 million to date, OIL (iPath S&P GSCI Crude Oil Total Return ETN, Expense Ratio 0.75%, $313 mln in AUM), and USL (United States 12 Month Oil Fund, Expense Ratio 0.60%, $76 million).

Noting the steep drop off in assets under management in between OIL and USL, there are a number of other “long” funds (some very specialized) that operate in the space albeit are much smaller in terms of sizes. These include BNO (United States Brent Oil Fund, Expense Ratio 0.94%), OILZ (ETRACS Oil Futures Contango, Expense Ratio 0.85%), OLO (PowerShares DB Crude Oil Long ETN, Expense Ratio 0.75%), OLEM (iPath Pure Beta Crude Oil, Expense Ratio 0.75%), UCO (ProShares Ultra DJ-UBS Crude Oil, Expense Ratio 0.95%) and CRUD (Teucrium WTI Crude Oil Fund, Expense Ratio 1.00%).

On the short side, DNO (United States Short Oil Fund, Expense Ratio 0.60%) is structured to track the inverse return of light, sweet crude prices, and recently saw a pick-up in activity given the presence of USO put buyers and the continued rise in oil prices.

SCO (ProShares UltraShort DJ-UBS Crude Oil, Expense Ratio 0.95%) has seen a notable spike in trading activity as well lately. None of these funds are constructed identically, and being futures based, each has their own methodological nuances in terms of index construction and actual level of tracking.

U.S. Oil Fund

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

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