Industry Updates

Investors continue to pour into oil ETPs as market takes bulls on wild ride

Tom Eckett

a machine in a field

The inflows into oil exchange-traded products show no signs of letting up as investors look to gain exposure to historic low levels in prices.

According to data from Ultumus, the $1.9bn WisdomTree WTI Crude Oil ETP (CRUD), Europe’s largest oil ETP, saw the most inflows across all European-listed ETFs last week as investors poured $658m into the product.

There was also interest from European ETF investors in other products. The WisdomTree Brent Crude Oil 1mth ETC (OILB) saw $93m inflows while investors sunk $84m into the UBS ETF CMCI Oil USD SF ETC (OILUSA).

Overall, just under $1bn assets flowed into oil ETPs listed in Europe last week as investors sought to take advantage of current oil prices.

This has been the same story throughout the year. As oil prices have continued to fall from highs of $68 a barrel at the start of the year, bullish investors have sunk more and more into oil ETPs in hopes of a rebound.

Highlighting this, the United States Oil Fund (USO), the world’s largest ETF, saw $1.5bn inflows in the week to 15 April, the most on record.

However, oil prices have not yet rebounded with West Texas Intermediate plummeting to as low as $-40 a barrel on 20 April as storage disappeared.

Regulators on notice as ETPs exacerbate volatility in oil markets

Volatility has shown no signs of letting up with big swings becoming part and parcel of the market over the past few weeks. For example, there was a 24% swing in WTI last Friday alone.

Due to concerns around oil prices once again trading below negative, ETF issuers and index providers have altered their strategies in order to avoid products hitting $0.

The sharp drop in prices caused a mass exodus from the WTI June contracts as issuers moved exposure to safer longer-dated contracts.

One oil ETP, the $497m Samsung S&P GSCI Crude Oil ER Futures ETP (3175), was forced to suspend the creation of shares on 4 May after its broker refused to facilitate any increase in WTI futures contracts purchases.

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