The ProShares Ultra DJ-UBS Crude Oil (NYSE:UCO) was recovering some of its recent losses on Wednesday morning, but many signs are pointing to further losses for oil in the coming weeks.
That’s because oil is off to its worst start to a calendar year in 20 years. Reuters has more details on how and why crude has been such a weak performer:
So far this year, oil has lost 20 percent in value, its weakest performance for the first six months of the year since 1997.
Compliance with an agreement by the Organization of the Petroleum Exporting Countries and other producers to cut output by 1.8 million barrels per day from January reached its highest in May since the curbs were agreed last year.
Yet global inventories of both crude and refined products remain well above their long-term averages.
From both a fundamental (supply & demand) and a technical perspective, oil still looks like a strong sell here. But despite its horrendous performance, investors have been net buyers of oil ETFs in 2017 so far.
Catching a bottom in oil prices has proven elusive for several years now, in fact. As the energy industry tries to figure out have to push prices higher, investors are well advised to steer clear.
The ProShares Ultra DJ-UBS Crude Oil (NYSE:UCO) was trading at $13.36 per share on Wednesday morning, up $0.09 (+0.68%). Year-to-date, UCO has declined -42.81%, versus a 8.79% rise in the benchmark S&P 500 index during the same period.