PowerShares DB Oil ETF (DBO) Becomes Latest Oil Fund To Hit New Lows

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June 23, 2017 9:34am NYSE:DBO

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From Zacks: Investors looking to avoid underperformance should steer clear of PowerShares DB Oil Fund (DBOFree Report). The fund recently hit a new 52-week low. Shares of DBO are down roughly 24.9% from its 52-week high of $9.91/share.


But is more pain in store for this ETF? Let’s take a quick look at the fund and the near-term outlook to get a better idea of where it might be headed.

DBO in Focus
DBO focuses on providing exposure to West Texas Intermediate crude oil (WTI), the most popular benchmark for crude. It charges 75 basis points in fees per year and has AUM of $359.6 million (see all Energy ETFs here).

Why the Move?
Crude oil has been gaining a lot of traction lately. Though crude prices went on a rising trajectory after the OPEC cuts in November, continuous increase in the U.S. output has been weighing on the prices lately. Most recently, WTI shed 2.3% to close at $42.53/barrel as there is increased uncertainty about achieving the desired outcome if U.S. output continues to nullify the efforts of the other countries in the pact.

More Losses Ahead?
With oil prices on a freefall, we believe it is best to avoid this ETF. The fund has a weighted alpha of -21.6 and a high 14-day standard deviation of 22.94%. So, the outlook for this fund remains quite bleak.

The PowerShares DB Oil Fund ETF (NYSE:DBO) was unchanged in premarket trading Friday. Year-to-date, DBO has declined -22.73%, versus a 8.74% rise in the benchmark S&P 500 index during the same period.

DBO currently has an ETF Daily News SMART Grade of C (Neutral), and is ranked #44 of 130 ETFs in the Commodity ETFs category.


This article is brought to you courtesy of Zacks Research.


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