Calendar An icon of a desk calendar. Cancel An icon of a circle with a diagonal line across. Caret An icon of a block arrow pointing to the right. Email An icon of a paper envelope. Facebook An icon of the Facebook "f" mark. Google An icon of the Google "G" mark. Linked In An icon of the Linked In "in" mark. Logout An icon representing logout. Profile An icon that resembles human head and shoulders. Telephone An icon of a traditional telephone receiver. Tick An icon of a tick mark. Is Public An icon of a human eye and eyelashes. Is Not Public An icon of a human eye and eyelashes with a diagonal line through it. Pause Icon A two-lined pause icon for stopping interactions. Quote Mark A opening quote mark. Quote Mark A closing quote mark. Arrow An icon of an arrow. Folder An icon of a paper folder. Breaking An icon of an exclamation mark on a circular background. Camera An icon of a digital camera. Caret An icon of a caret arrow. Clock An icon of a clock face. Close An icon of the an X shape. Close Icon An icon used to represent where to interact to collapse or dismiss a component Comment An icon of a speech bubble. Comments An icon of a speech bubble, denoting user comments. Ellipsis An icon of 3 horizontal dots. Envelope An icon of a paper envelope. Facebook An icon of a facebook f logo. Camera An icon of a digital camera. Home An icon of a house. Instagram An icon of the Instagram logo. LinkedIn An icon of the LinkedIn logo. Magnifying Glass An icon of a magnifying glass. Search Icon A magnifying glass icon that is used to represent the function of searching. Menu An icon of 3 horizontal lines. Hamburger Menu Icon An icon used to represent a collapsed menu. Next An icon of an arrow pointing to the right. Notice An explanation mark centred inside a circle. Previous An icon of an arrow pointing to the left. Rating An icon of a star. Tag An icon of a tag. Twitter An icon of the Twitter logo. Video Camera An icon of a video camera shape. Speech Bubble Icon A icon displaying a speech bubble WhatsApp An icon of the WhatsApp logo. Information An icon of an information logo. Plus A mathematical 'plus' symbol. Duration An icon indicating Time. Success Tick An icon of a green tick. Success Tick Timeout An icon of a greyed out success tick. Loading Spinner An icon of a loading spinner.

Oil investors keep betting wrong on when market will hit bottom

Shell relocates Houston staff
Houston, Texas

Investors betting on a rebound in oil prices are nothing if not tenacious.

They have poured the most money in more than four years into exchange-traded products that track oil as prices fell 18% this month.

It’s the third consecutive month that the four biggest US funds have received money, during which time futures have plunged 41%.

“It’s a testament that after such a wild selloff people are more and more eager to step in and wait for this eventual rebound,” said Stoyan Bojinov, a Chicago-based analyst at ETF Database.

“Oil looked cheap a month ago and it’s even cheaper today, that’s why we continue to see these inflows.”

Oil prices have tumbled by half since June amid surging production and slower than expected demand growth.

Output in the US is the highest in three decades, and OPEC, responsible for about 40% of global supply, maintained its output target at a November 27 meeting.

The US Energy Information Administration said last week that consumption around the world next year will be 390,000 barrels a day less in 2015 than it forecast in October.

WTI for December delivery fell $2.36 to settle at $54.11 a barrel on the New York Mercantile Exchange today.

The EIA expects WTI to average $62.75 a barrel next year, down from the October estimate of $101.67.

Oil funds keep receiving money even as investors flee commodities amid the price slump in oil, corn and gold.

ETFs tracking metals, energy and agriculture have seen a net withdrawal of $169.4 million this year.

ETFs that track oil prices give people the opportunity to bet on price moves without requiring the large amount of capital necessary to invest directly in commodity exchanges.

They also give hedge funds that normally trade equities a chance to wager on a commodity without setting up new back office systems.

The four biggest US exchange-traded products tied to oil, including the US Oil Fund and ProShares Ultra Bloomberg Crude Oil, received a combined $702.2 million this month as of yesterday, following a $559.85 million inflow in November, according to ETF data.

It’s the most in any month since May 2010, when the funds received $1.54 billion.

The four funds had 121.2 million shares outstanding yesterday, the most since August 2010, according to data.

“You want prices lower if you’re buying,” John Hyland, chief investment officer of United States Commodity Futures Funds, the Alameda, California-based manager of the United States Oil Fund, said by telephone.

“Your chances of getting a big bounce are better if you’re buying at $50 or $75 than at $100 or $125.”

Recommended for you

More from Energy Voice

Latest Posts