Trade Alert – Short Crude

by | Apr 20, 2020 | Daily Trade Alert

There were hopes oil would recover.

But that may not happen – at least, not any time soon, we noted on April 6.

With oil likely to turn lower, we can look to ETFs and ETNs for opportunity, as we also highlighted. Three of the top ones that rise as oil drops include:

  • DB Crude Oil Double Short ETN (DTO)
  • Pro Shares UltraShort Bloomberg Crude Oil (SCO)
  • VelocityShares 3x Inverse Crude Oil ETN (DWT)

For one, there’s far too much supply on the market and no demand.

“Oil demand will this month hit its lowest levels for the year, according to the International Energy Agency, falling 29m barrels a day below last year’s average to levels not seen since 1995,” as reported by The Guardian.

In addition, the world is still flooding the world with oil with the pact yet to begin, says Bloomberg. “And, according to the U.S. Energy Information Administration, for the week ending April 10 inventory increased by 19.2 million barrels. Analysts were only expecting just over 12 million barrels, reports CNBC.

It’s gotten so bad some tankers are storing global oil supply at sea. According to President Trump, we don’t have room to store oil anymore. We are using ships to store it. There’s never been a glut like this. We have to get rid of this tremendous supply,” as quoted by Forbes.

At this point, oil could sink to less than $10 unless supply is severely cut.

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