Oil production in America is booming, especially after the discovery of shale oil in regions of North Dakota and Texas. The development of these resources is now beginning to have a huge impact on the global hydrocarbon markets, as evidencedby a report from the Energy Information Association (EIA) which states that, last month, shale oil production had reached 7.4 million barrels per day.
Further, an estimate by the International Energy Agency (IEA) projects that the world’s largest economy will achieve shale oil production of 9 million barrels a day by 2018. In fact, some believe that the country will surpass Saudi Arabia in oil production by 2020, underscoring America’s dramatic rise up the oil charts (see Crude Oil ETF Investing 101).
Troubled times for investors
Oil has proven to be a haven for investors in the commodity space; moreover oil prices are constantly tracked and monitored as they are considered to be a key economic indicator. In spite of good news from the American oil production industry, oil prices have remained volatile and have worried investors lately.
The political turmoil in Egypt and sluggish data from China has been instrumental in keeping oil prices highly volatile and range-bound. The increase in cost of oil extraction and a strong dollar have restrained the commodity to break out of the low $100/bbl. level. Added to this is a general commodity aversion that has also kept a lid on prices for this natural resource.
Possible bets for investors
The recent resilience in the oil and gas sector has left investors highly confused about how to play oil. Those who seek to play in this challenging commodity may look at the available options which could be solid picks if the commodity breaks out higher:
United States Oil Fund (NYSEARCA:USO)
Launched in April 2006, USO seeks to reflect the performance, less expenses, of the spot price of West Texas Intermediate light, sweet crude oil and is a popular choice amongst investors. The fund has a good asset base of $1.46 billion and charges 45 bps in fees.
Moreover, the ETF trades in a daily average volume of 4.7 millions shares a day. Over a one-year period, the fund has yielded decent returns of 7.3% as of Jun 30. The fund is ideal for investors who wish to play short in this space.
iPath S&P GSCI Crude Oil Total Return Index (NYSEARCA:OIL)
Launched in Aug 2006, OIL is designed to provide exposure to the S&P GSCI Crude Oil Total Return Index. The fund has an asset base of $314.7 million, though the ETF is a bit expensive as it charges 75bps in fees and expenses (see 3 ETFs for the Unconventional Oil Revolution).
The ETF has a daily average trading volume of 800,000 shares. The fund has given returns of 8.13% as of Jun 30, for the trailing one-year period.
(...)Click here to continue reading the original ETFDailyNews.com article: The Short-Term Outlook For Oil ETFs Isn’t Good You are viewing an abbreviated republication of ETF Daily News content. You can find full ETF Daily News articles on (www.etfdailynews.com)
![]()
You are viewing an abbreviated republication of ETF Daily News content. You can find full ETF Daily News articles on (www.etfdailynews.com)
![]()
