US Oil Inventory Glut Poised to Pump Up Volatility
- Further price volatility in oil is expected after the US Department of Energy reported yesterday the largest rise in US crude oil inventories in over 4 months. This will deepen concerns about the global oil glut especially on the back of souring sentiment in China.
- Oil prices have already collapsed since the start of the week with WTI down by 6%, representing a sizeable reversal in sentiment following last week’s 25% rally. Geared short ETPs tracking WTI have returned 16.3% this week (as of yesterday, see chart).
- Boost ETP, a WisdomTree Company, has seen significant creations in oil ETPs of over $18m this week, suggesting that at times of heightened volatility, investors take advantage of trading crude oil using S&L ETPs with the aim to hedge their long exposures or to position opportunistically.
- This follows on from strong trading volumes for our oil ETPs in August: trading volumes reached over $170 million for the last week of August and notional AUM was heavily skewed towards geared long positions at over $600 million.
Investors sharing this sentiment can review following S&L Boost ETPs:
- Boost WTI Oil 1x Short Daily ETP (OILZ)
- Boost WTI Oil 2x Short Daily ETP (2OIS)
- Boost WTI Oil 3x Short Daily ETP (3OIS)
All data is sourced from WisdomTree Europe and Bloomberg, unless otherwise stated.