The mass media believes that the asset outflow from oil exchange-traded funds (ETF) may mean a possible fall in oil prices. Exchange funds investing in WTI futures lost $2.7 billion since early April, the data provided by investment bank Macquarie Group Ltd. reads.
It is the first decline in the reading since December. The outflow started due to the tumble in prices in early 2015. From January to mid-March, funds traded on stock attracted about $6 billion. But WTI prices grew 32% since March 17.
Traders and analysts monitor oil production and demand data in the US for signs that the global glut of crude oil may be shrinking. Crude is still vulnerable, and funds outflow may trigger a decline in prices. That is why experts keep abreast of the ETF trends.
If investors “all exit at the same time, then it will also put pressure on the market,” Olivier Jakob, managing director of Swiss consulting firm Petromatrix GmbH, said.
Oil index funds invest in oil future contracts. For instance, US Oil Fund held 11% of all positions on the June WTI contracts traded on the NYMEX as of April 24.
Most retail investors believe that weak oil prices will create a favorable moment for entering the market, but the ETF structure may frighten off them.
