VelocityShares 3X Long Crude ETN linked to the S&P GSCI Crude Oil Index Excess Return (NYSEARCA:UWTI) In For Trouble


VelocityShares 3X Long Crude ETN linked to the S&P GSCI Crude Oil Index Excess Return (NYSEARCA:UWTI) net flows reached $1070.59 million, according to the weekly report. This positive news leaves it with excess funds for investors and creates the demand for the holdings of the ETF. The stock saw a 1.02% dip earlier this month but the ETF continues to outperform by 111.84%.

The YTD performance of the ETF stands at -78.55% and the current imbalance in the crude oil industry is expected to reach a balance soon. Oil prices saw a $40 dip per barrel earlier this month and analysts were positive on the trading at the exchange. The CME Group reported that the 20,000 put option contract for December permitted the traders to sell Nymex futures contacts and this would definitely not be a bad bargain.

Crude Oil Prices Reach New Low

The crude prices can be controlled by the increasing buying pressure, according to the market analysts. The falling prices of oil have become a matter of concern for the oil industry. As on November 13, the crude oil sold by the Organization of Petroleum Countries (0PEC) saw a fall in price to $39.21 a barrel. This was the first time that the prices of crude had fallen below the $40 a barrel benchmark since 2009.

According to the International Energy Agency, OPEC will need a lot of time before it could effectively price out high-cost producers. The increased production of OPEC has impacted the major crude oil related exchange traded funds that continues descending.

Traders Need To Be Cautious

Analysts caution against volatile ETFs as the commodity was still bearish. Investors need to tread with care and not become an active part of the strengthening as recovery was not in vision and this could impact the investors. Oil price increase is on the cards but it still seems a distant reality for now and this can have a negative impact on crude exchanges.

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