We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Oil suffered a great deal in 2018, especially in the fourth quarter. Concerns over rising output amid softer-than-expected U.S. sanctions on Iran and falling demand from global growth worries weighed on oil prices in the fourth quarter. Overall, United States Oil (USO - Free Report) and United States Brent Oil (BNO - Free Report) have lost about 19.7% and 14.6% in the past year (as of Jan 3, 2018) (read: 4 Worst ETF Areas of Q4).
Is the Outlook Bright for 2019?
In early December, OPEC and Russia reached an agreement to cut output by 1.2 million barrels per day during the two-day meeting in Vienna to drain supply glut and boost prices. Under the deal, OPEC and Russia will cut 800,000 bpd and other top non-OPEC oil producers will be responsible for the rest.
Hedge funds are hopeful on this deal. Their net-long position -- the difference between bets on higher Brent prices and on a falloff -- rose 6.7% to 162,249 contracts -- for the six days ended Dec 24, per ICE Futures Europe data, as quoted on Bloomberg. In fact, short positions declined to the lowest level from late November.
Already, OPEC oil supply dropped in December by the biggest amount in almost two years, per Reuters. While Saudi and the United Arab Emirates posted large voluntary cuts, the third largest was an unintentional cut by Libya, where unrest caused the shutdown of the country’s biggest oilfield. Output from Iran has also fallen due to U.S. sanctions.
Analysts surveyed by Bloomberg forecast Brent to average $70 a barrel in 2019 as OPEC’s output cut is put into effect and there are involuntary output losses in Venezuela and Iran. Also, oil prices have been on an uptrend of late on hopes of U.S.-Chinese trade truce. Officials from both countries are currently discussing in Beijing on trade negotiations.
If this happens, investors should keep a close eye on the commodity and the related ETFs.
ETFs in Focus
This has compelled many investors to look into the oil commodity world and these ETFs.
Image: Bigstock
Hedge Funds Bet Big on Oil: ETFs in Focus
Oil suffered a great deal in 2018, especially in the fourth quarter. Concerns over rising output amid softer-than-expected U.S. sanctions on Iran and falling demand from global growth worries weighed on oil prices in the fourth quarter. Overall, United States Oil (USO - Free Report) and United States Brent Oil (BNO - Free Report) have lost about 19.7% and 14.6% in the past year (as of Jan 3, 2018) (read: 4 Worst ETF Areas of Q4).
Is the Outlook Bright for 2019?
In early December, OPEC and Russia reached an agreement to cut output by 1.2 million barrels per day during the two-day meeting in Vienna to drain supply glut and boost prices. Under the deal, OPEC and Russia will cut 800,000 bpd and other top non-OPEC oil producers will be responsible for the rest.
The fresh output cut deal is applicable for the first six months of 2019, with a review scheduled for April. The group has used October output levels as a reference point for cuts. Iran got an exemption from the cuts as it is already facing U.S. sanctions(read: Is Fresh OPEC+ Output Cut Enough to Boost Oil & Energy ETFs?).
Hedge funds are hopeful on this deal. Their net-long position -- the difference between bets on higher Brent prices and on a falloff -- rose 6.7% to 162,249 contracts -- for the six days ended Dec 24, per ICE Futures Europe data, as quoted on Bloomberg. In fact, short positions declined to the lowest level from late November.
Already, OPEC oil supply dropped in December by the biggest amount in almost two years, per Reuters. While Saudi and the United Arab Emirates posted large voluntary cuts, the third largest was an unintentional cut by Libya, where unrest caused the shutdown of the country’s biggest oilfield. Output from Iran has also fallen due to U.S. sanctions.
Analysts surveyed by Bloomberg forecast Brent to average $70 a barrel in 2019 as OPEC’s output cut is put into effect and there are involuntary output losses in Venezuela and Iran. Also, oil prices have been on an uptrend of late on hopes of U.S.-Chinese trade truce. Officials from both countries are currently discussing in Beijing on trade negotiations.
If this happens, investors should keep a close eye on the commodity and the related ETFs.
ETFs in Focus
This has compelled many investors to look into the oil commodity world and these ETFs.
United States Brent Oil Fund (BNO - Free Report)
United States Oil Fund (USO - Free Report)
US Commodity Funds United States 12 Month Oil (USL - Free Report)
We highlight a few regular energy ETFs that should also be watched closely.
VanEck Vectors Unconventional Oil & Gas ETF
SPDR S&P Oil & Gas Exploration & Production ETF (XOP - Free Report)
John Hancock Multifactor Energy ETF
Want key ETF info delivered straight to your inbox?
Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free >>