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Which ETF to choose when we want to trade oil?

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Since early 2019, the price of crude oil has been up by nearly 36%. The sudden rise in price is the result of OPEC +'s continuing reduction in yield and renewed US sanctions on Iranian exports.

In the last 12 months, however, the price is down 12%. In the last five years, the price has been down 40% since it last recorded a price of $ 100 a barrel. 12 - month price changes are largely due to speculation mainly from hedge funds. In April of last year, hedge funds opened 15 long positions for each short. The mines week the ratio was 7.08 long positions for each short.

Investors who want to take long positions at this stage can feel comfortable. They also have a completely safe way to get oil, acquiring shares in several stock-traded funds that focus on the energy sector and especially on oil and gas. Below you can get acquainted with five ETFs, including three leverage funds that chase returns in the sectors. However, leveraged funds may not be suitable for investors who plan to hold positions for more than one day.

The United States Oil Fund (NYSEARCA: USO) is managing assets worth $ 1.53 billion. The fund daily monitors the price of WTI, which is delivered to the Cushing, Oklahoma tankers. The fund is a commodity pool that invests 100% of its assets in WTI.

ProShares Ultra Bloomberg Crude Oil (NYSEARCA: UCO) has assets worth $ 386 million. The fund aims to be at least twice as good as the daily performance of the Bloomberg WTI Crude Oil Subindex. And this background invests all its assets in WTI.

VelocityShares 3x Long Crude Oil (NYSEARCA: UWT) is the so-called Exchange - Traded Note (ETN), with about $ 357 million under management. The securities are issued by Citigroup Global Markets, a Citigroup guarantor. The fund seeks at least three times more returns than the S & P GSCI Crude Oil Index ER. All fund assets are invested in futures that are rollover at the end of each month.

The Invesco DB Oil Fund (NYSEARCA: DBO) manages $ 309 million. The fund chases as the DBIQ Optimum Yilted Crude Oil Index Excess Return. Less than 1% of the Fund's assets are invested in US Treasuries and Monetary Funds. The rest is invested in crude oil futures.

Photo: Flickr


 Jr Trader Martin Nikolov

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