Best Short-Term ETF for trading crude oil spot price?

Discussion in 'ETFs' started by MacDRider, Feb 17, 2009.

  1. I know that USO trades the spot price of oil by holding futures contracts, although the contango is really hurting USO right now--although I'm not sure if it's only on certain days in the month when USO is hurt by contango, or if that occurs somewhat consistently throughout a month?

    But let's say we see crude go to $32 or $30 and you want to make a short-term play on that contract going up. What would you do?

    USL averages 12 months of contracts, so I don't think that would help at all since the later contracts could (and probably would) continue to go down even if spot went from $30 or $32 back up to $35.
  2. ETFDesk


    Look at OLO. It has outperformed USO, down ~14% ytd vs USO ~27%
  3. OLO is moving with the JULY FUTURES CONTRACT (sorry to scream, but that's very important) and will do so until June 2nd-6th, so that would not do what I'm hoping for here.

    However, the July futures contract is currently under $45, so it may indeed be a good time to buy OLO or the 2x DXO. If oil languishes in the $30s or low $30s though, then there's still some real risk with these. I'm waiting to see the July contract closer to $43 or $42 before I get back into DXO or OLO--although even that's risky if oil stays mainly in the $30s (or lower) over the next four months.
  4. From my notes, DOY/UOY also track the WTI spot price. Both have low vol compared to other sector ETFs; I haven't traded either one.
  5. I may have hit the $43 or $42 target right on the head with the bottom on the July contract. Of course, I didn't take my own advice, though, and didn't get into DXO at that time (love it when that happens)...

    (July oil futures went down to the low $42s yesterday).
  6. Could have made ~7% in USO today, a lot of hype regarding USO Contango. Bottom line, USO moves with market & Oil, plus huge short interest. I wouldn`t be surprised if it hits 31 in 3 weeks time, shoot if next weeks inventory is another draw we will be there by next Friday!
  7. You could very well be right. I doubt it goes that high unless the market recovers, though. If the broader market is doing well (let's say, Dow at 8K+), then I think oil is probably headed up for the short term. If it does that, though, I wouldn't be at all surprised to see the spot price back in the $30s again soon after.

    OTOH, if oil keeps climbing (a big if IMO) it may pull the markets up with it to some extent.

    If the bank plan is eventually announced, and the market likes the plan, oil could go up significantly.
  8. What about UCO? I know this may sound off-topic but what if that one would be good for short term AND longer term holding?