Crude oil ETNs 3x UWTI VelocityShares 3x Long Crude Oil ETN and -3x DWTI VelocityShares 3x Inverse Crude Oil ETN
Traders News Source 10-10-16 Ramakrishnan Iyer
West Texas Intermediate crude broke the barrier of $ 50 per barrel for the first time since June 24 and this increase comes on top of a number of pieces of good news, which may help in rebalancing the dynamics of supply and demand. Last week, the OPEC preliminary agreed to a cap on the production of oil and subsequently, the Energy Information Association announced that reserves of oil in the US had decreased by 3 million barrels, which was against all expectations. Over the past one and a half years, there has been an oversupply of oil, causing prices to catch the lowest level in over a decade and the latest news suggests that some of the oversupply may finally be being processed by the system.
Bloomberg reports that pessimists about oil continue to be pessimistic, even after the market rallied on the back of the output deal from OPEC. 56% of the analysts, traders and brokers surveyed were bullish which was up from 50% in the previous week. Futures in New York have risen by more than $5 a barrel since OPEC agreed last week to cut production and have risen over $50 for the first time in three months. OPEC has produced a record output in September and is scheduled to decide on the quotas of members at a meeting in Vienna on November 30th. Prices have also risen as US crude supplies declined by 26.1 million barrels to 499.7 million in the past five weeks. People are still sceptical about the OPEC agreement, say experts, because there is not much trust in the market about enforcement because of the patchy compliance record in the past. Saudi Arabia spearheaded the move by OPEC to adopt a policy of pump output in November 2014, but members routinely overshot their quotas, leading to a rise in global inventory is because of the resulting drop in prices.
However, the rally started to run out of steam on Friday, with prices dropping back below $50. US oil for November delivery dropped by $ .63, or 1.25% to $ 49.81 per barrel on the New York mercantile exchange and Brent was off by $ .58, or 1.1% at $ 51.93 on the ICE Futures Europe. Oil had earlier continued to rise after OPEC decided last week to cut production between 200,000 and 700,000 barrels per day to moderate the global oversupply, which has resulted in weakness in prices for more than two years. The unexpected reduction in US crude inventory for the fifth consecutive week also helped in boosting prices. Crude still ended the week with a third consecutive week of increases, but some participants in the market feel that oil prices have peaked for the moment. Participants feel that it is not going to be easy for the market to sustain the upward movement in price because of the fundamentals and some of the scepticism concerning OPEC and that the latest trading has reversed some of the strong gains for the week. Other experts say that another catalyst is required to drive prices higher because of the lack of follow-through on the upside. There was a brief rally in oil prices following the Data from the US Department of Labor that the economy added 156,000 jobs in September, which is well below the expectation of 170,000. In recent times, the price of oil has), followed the movements in the US dollar because of weaker dollar results in cheaper oil for buyers, but this trend has changed and optimism that the OPEC agreement has resulted from a fundamental change in the policy of Saudi Arabia to opt for market share, rather than price.
Forecasting oil prices in 2016
This has proved difficult because of the way market prices have fluctuated in 2016, with a number of investment banks such as Barclays producing forecasts which have been well wide off the mark and others often well off the target. The factors in predictions into a more normal winter this year compared to the mild winter last year, as well as political problems in Nigeria and Venezuela, which may have the effect of reducing OPEC production even before the deal was struck to cut production. Moreover, the cutback in production has to result in a sustained reduction in global inventory. Another important factor is that the economics of light oil production in the US is stronger than what is currently being forecast, prices will be checked lower, whereas weaker production would contribute to higher prices.
Crude oil ETNs 3x UWTI VelocityShares 3x Long Crude Oil ETN and -3x DWTI VelocityShares 3x Inverse Crude Oil ETN
VelocityShares® energy exchange traded products include leveraged long and inverse positions in futures on West Texas Intermediate crude oil using the benchmark of the S&P GSCI indices. It is true that institutional investors have a range of instruments (such as futures, swaps, and forwards) to use in energy investments, but these exchange traded products provide a convenient alternative with their own capabilities. They provide institutional investors with exchange traded instrument for managing risk or implementing short-term market views. The long products are designed to increase in value with the daily-resetting of 3x multiple of any increase in the underlying index, while the inverse products are designed to increase in value by a daily-resetting of 3x multiple of any decrease in value.
(UWTI) VelocityShares 3x Long Crude Oil ETN product data is closing indicative value of $ 26.93 with 51,032,583 ETNs outstanding and a market capitalisation of $ 1,374,307,460. The index weight is 20% NYM Crude Oil Futures November 2016 and 80% NYM Crude Oil Futures December 2016.
(DWTI) VelocityShares 3x Inverse Crude Oil ETN product data is closing indicative value of $ 59.65 with ETNs outstanding of 8,515,404 with a market capitalisation of $ 507,943,849. The index weight is 20% NYM Crude Oil Futures November 2016 and 80% NYM Crude Oil Futures December 2016.
Traders News Source LLC (Traders News Source) has compensated the author of this report for the redistribution rights.
Author’s Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I have no business relationship with any company whose stock is mentioned in the article.
The information contained herein is not intended to be investment advice and does not constitute any form of invitation or inducement by Ramakrishnan Iyer to engage in investment activity. Neither the information nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. Securities, financial instruments, strategies, or commentary mentioned herein may not be suitable for all investors and this material is not intended for any specific investor and does not take into account an investor’s particular investment objectives, financial situations or needs. Any opinions expressed herein are given in good faith, are subject to change without notice, and are only current as of the stated date of their issue. Prices, values, or income from any securities or investments mentioned in this report may fluctuate, and an investor may, upon selling an investment lose a portion of, or the entire principal amount invested. Past performance is no guarantee of future results. Before acting on any recommendation in this material, you should consider whether it is suitable for your particular circumstances and, if necessary, seek professional advice.
Our reports/releases are a commercial advertisement and are for general information purposes ONLY. We are engaged in the business of marketing and advertising companies for monetary compensation. Never invest in any stock featured on our site or emails unless you can afford to lose your entire investment. The disclaimer is to be read and fully understood before using our services, joining our site or our email/blog list as well as any social networking platforms we may use.
PLEASE NOTE: Traders News Source and its employees are not a Registered Investment Advisor, Broker Dealer or a member of any association for other research providers in any jurisdiction whatsoever.
Release of Liability: Through use of this website viewing or using you agree to hold Traders News Source, its operators owners and employees harmless and to completely release them from any and all liability due to any and all loss (monetary or otherwise), damage (monetary or otherwise), or injury (monetary or otherwise) that you may incur. The information contained herein is based on sources which we believe to be reliable but is not guaranteed by us as being accurate and does not purport to be a complete statement or summary of the available data. Traders News Source encourages readers and investors to supplement the information in these reports with independent research and other professional advice. All information on featured companies is provided by the companies profiled, or is available from public sources and Traders News Source makes no representations, warranties or guarantees as to the accuracy or completeness of the disclosure by the profiled companies. None of the materials or advertisements herein constitute offers or solicitations to purchase or sell securities of the companies profiled herein and any decision to invest in any such company or other financial decisions should not be made based upon the information provide herein. Instead Traders News Source strongly urges you conduct a complete and independent investigation of the respective companies and consideration of all pertinent risks. Readers are advised to review SEC periodic reports: Forms 10-Q, 10K, Form 8-K, insider reports, Forms 3, 4, 5 Schedule 13D. Traders News Source is compliant with the Can Spam Act of 2003. Traders News Source does not offer such advice or analysis, and Traders News Source further urges you to consult your own independent tax, business, financial and investment advisors. Investing in micro-cap and growth securities is highly speculative and carries and extremely high degree of risk. It is possible that an investor’s investment may be lost or impaired due to the speculative nature of the companies profiled.
The Private Securities Litigation Reform Act of 1995 provides investors a ‘safe harbor’ in regard to forward-looking statements. Any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, goals, assumptions or future events or performance are not statements of historical fact may be “forward looking statements”. Forward looking statements are based on expectations, estimates, and projections at the time the statements are made that involve a number of risks and uncertainties which could cause actual results or events to differ materially from those presently anticipated. Forward looking statements in this action may be identified through use of words such as “projects”, “foresee”, “expects”, “will”, “anticipates”, “estimates”, “believes”, “understands”, or that by statements indicating certain actions & quote; “may”, “could”, or “might” occur. Understand there is no guarantee past performance will be indicative of future results.
In preparing this publication, Traders News Source has relied upon information supplied by its customers, publicly available information and press releases which it believes to be reliable; however, such reliability cannot be guaranteed. Investors should not rely on the information contained in this website. Rather, investors should use the information contained in this website as a starting point for doing additional independent research on the featured companies. The advertisements in this website are believed to be reliable; however, Traders News Source and its owners, affiliates, subsidiaries, officers, directors, representatives and agents disclaim any liability as to the completeness or accuracy of the information contained in any advertisement and for any omissions of materials facts from such advertisement. Traders News Source is not responsible for any claims made by the companies advertised herein, nor is Traders News Source responsible for any other promotional firm, its program or its structure.
Traders News Source is not affiliated with any exchange, electronic quotation system, the Securities Exchange Commission or FINRA. Traders News Source is not a Broker/Dealer and does not engage in high frequency trading.