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Oil prices declined more than 3% on Sept. 10, 2024, and fell to the lowest level since 2021 as OPEC lowers demand growth forecast.
This article analyzes the ProShares UltraShort Bloomberg Crude Oil ETF within the context of the recent OPEC meeting and its impact on oil prices. OPEC+ extended oil production cuts to support prices and government budgets, in a meeting led by Saudi Arabia. This indicates OPEC's commitment to maintaining a certain price floor for oil. SCO is a leveraged short oil fund, not suitable for buy-and-hold investors.
SCO is a double short instrument that returns double the inverse of crude oil futures contracts. I advise against investing in SCO due to my belief that WTI crude is set to rise in the months ahead. My favorable outlook on crude oil means avoiding SCO is likely the right play. I explain why in this review.
Oil futures and ETFs fell sharply on Thursday, while inverse crude ETFs soared amid rumors of there being a chance to mitigate tensions in the Middle East. Crude traders have been observing how issues in the Middle East are playing out.
ProShares UltraShort Bloomberg Crude Oil ETF is a double short instrument that provides investors with an amplified return on their bet when oil is overbought. Shorting any underlying stock or commodity comes with heightened risks, so caution should be exercised when considering SCO as an investment option. With oil prices dropping and money managers betting on further declines, SCO may seem tempting, but its risks should be carefully considered.
Crude oil prices dropped on Tuesday. This pulled crude ETFs lower amid growing concerns that ongoing hawkish monetary tightening will affect global economic activity as the year progresses.
Saudi Arabia's voluntary production cut of one million bpd at the recent OPEC+ meeting can basically be viewed as attempting to create a floor for crude prices by limiting supply. In addition, there are demand-related factors which favor higher prices. However, a recent trade opportunity to Short the ProShares UltraShort Bloomberg Crude Oil ETF (SCO) has elapsed.
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