Energy-Related ETFs Slammed Amid Oil Price Meltdown

March 10, 2017 11:56am NYSE:USO

oil drum

Crude Oil has been pummeled this week, with the largest ETP in the space USO (U.S. Oil, Expense Ratio 0.45%) plunging more than 7% in the past three trading sessions on price compression there on high supply levels.


Additionally, there has been considerable talk this week on the “Shale” front, notably with a Bloomberg.com article titled “Oil Traders Are Having Some Fun Again As Price Bubble Bursts,” citing that “Harold Hamm, the billionaire shale oilman, said at an energy conference in Houston this week that his industry could “kill” the oil market if companies keep increasing spending to boost drilling.”

Related ETF FRAK (VanEck Vectors Unconventional Oil & Gas, Expense Ratio 0.54%) had a very volatile day yesterday, plunging intraday to its lowest level since late last summer before rebounding and finishing up on the day.

Energy related equities have had a tough time this week in general, with funds like XLE (SPDR Energy Select Sector, Expense Ratio 0.15%) getting punished on Tuesday through Thursday, and slicing through its 200 day MA ultimately on Thursday. XLE briefly traded at its lowest level since last November before bouncing slightly on heavy trading volume.

Year-to-date, in spite of the recent volatility and Crude Oil futures sell-off, XLE has still managed to take in net assets (over $725 million in), while USO has seen some outflows (-$215 million). FRAK flows have been relatively flat during this time frame.

Because of the explosion in volatility in the past several sessions in Crude Oil prices, traders and portfolio hedgers are likely very focused on daily leveraged Bull and Bear products here. We have noticed an uptick in trading volume and interest in specific names such as: UCO (ProShares Ultra Bloomberg Crude Oil, Expense Ratio 0.95%), SCO (ProShares UltraShort Bloomberg Crude Oil, Expense Ratio 0.95%), UWT (VelocityShares 3X Long Crude Oil ETN, Expense Ratio 1.50%), DWT (VelocityShares 3X Inverse Crude Oil ETN, Expense Ratio 1.50%), DTO (PowerShares DB Crude Oil Double Short ETN, Expense Ratio 0.75%), DNO (U.S. Short Oil, Expense Ratio 0.60%), SZO (PowerShares DB Crude Oil Short ETN, Expense Ratio 0.75%), OLO (PowerShares DB Crude Oil Long ETN, Expense Ratio 0.75%), WTID (UBS ETRACSProShares Daily 3X Inverse Crude ETN, Expense Ratio 1.85%), and WTIU (UBS ETRACS-ProShares Daily 3X Long Crude ETN, Expense Ratio 1.85%).

USO-2017-03-10

The United States Oil Fund LP ETF (NYSE:USO) was trading at $10.39 per share on Friday morning, down $0.14 (-1.33%). Year-to-date, USO has declined -11.35%, versus a 6.21% rise in the benchmark S&P 500 index during the same period.

USO currently has an ETF Daily News SMART Grade of B (Buy), and is ranked #25 of 122 ETFs in the Commodity ETFs category.


Disclaimer: The content of this article is excerpted from a daily newsletter from Street One Financial. While ETF Daily News may edit the contents and add a relevant title to the piece, the author, Paul Weisbruch, does not endorse or recommend any issuer or security mentioned herein.

About the Author: Paul Weisbruch

paul-weisbruchPaul Weisbruch is the VP of ETF/Options Sales and Trading at Street One Financial. Prior to joining the team at Street One, Paul served as the Director of RIA and Institutional ETF Sales at RevenueShares ETFs from December 2007 until November of 2009. Before RevenueShares, Paul was employed by Susquehanna International Group from 2000 until 2007 serving in roles including OTC/NYSE Institutional Block Trading, Nasdaq/OTC Market Making, ETF/Derivatives Intelligence and Strategy, Algorithmic Trading, as well as acting as the PHLX Floor Specialist in the ETFs, SPY and DIA.Paul has been actively involved in the ETF space from both a product and trading standpoint since 2000. Additionally, Paul has well forged relationships with national RIAs, institutional pension fund managers and consultants, mutual fund and hedge fund managers, and also the ETF media. Co-authoring the “S1F ETF Daily” since 2009, the daily piece has become a must for many portfolio managers in the ETF space, with segments regularly appearing in the likes of Barron’s, WSJ, and ETFTrends.com for instance.

He holds his Series 4 (Registered Options Principal), 6, 7, 55 (Equity Trader), 63, and 65 licenses. He graduated from the University of Pittsburgh (B.S. – Economics), graduating magna cum laude, and has an MBA from Villanova University.


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