Oil prices were under pressure, falling over 3% last week
despite the Fed's decision to keep its monetary stimulus intact.
The bearish trend is likely to continue this week as well on
receding fears of the Middle East supply disruption, reduced
prospect of the U.S. led military strike against Syria and the Iran
Oil ETFs Jump on Syria Turmoil
Production in Libya is back on track and recovered to nearly 40% of
its pre-war capacity. Oil production is expected to reach 700,000
barrels per day, up from the current level of 243,000 barrels per
The world leaders will gather at the UN general assembly in New
York this week. Speculations over direct talks between the
President of the U.S. and Iran at the meeting are mounting. The
possible meeting would be the first since the 1979 revolution, and
could ease the decade-long diplomatic tension between the two
Iranian President Hassan Rouhani is seeking smoother relations with
the West. In an interview last week, the President signaled that
Iran would not develop any nuclear weapons if the U.S. offers some
relief on international sanctions that has curtailed its oil
exports and upset the economy for quite some time (read:
3 Country ETFs to Buy on an Oil Surge
The possible talks could be a turning point in the U.S.-Iranian
relations and help to ease the tension in the Middle East. However,
major questions remain on whether Iran would accept the U.S.
proposal of curbing uranium enrichment and closing down the
underground Fordo nuclear facility.
As such, investors should closely monitor the movements in the oil
funds irrespective of whether the crisis in Iran leads to
meaningful negotiations or comes up with a new story. Below, we
highlighted the three ETFs that would be impacted most by the
U.S.-Iran talks (see:
all the energy ETFs here
Oil Fund (
This is the most popular and liquid ETF in the oil space with AUM
of over $1.4 billion and average daily volume of over 6.1 million
shares. The fund seeks to match the performance of the spot price
of light sweet crude oil West Texas Intermediate (WTI). The ETF has
0.74% in annual expenses.
The ETF lost over 1.4% in the last five trading sessions but is up
nearly 11.7% so far this year.
Brent Oil Fund (
This fund provides direct exposure to the spot price of Brent crude
oil on a daily basis through future contracts. It has amassed $42.7
million in its asset base and trades in moderate volume of roughly
64,000 shares a day (see more in the
The ETF charges 96 bps in annual fees and expenses. BNO lost about
2.3% in the trailing five days while it is up over 3% in the
PowerShares DB Oil Fund (
This product provides exposure to crude oil through WTI futures
contracts and follows the DBIQ Optimum Yield Crude Oil Index Excess
Return. The fund sees solid average daily volume of more than
235,000 shares and AUM of $366.3 million. It charges an expense
ratio of 79 bps.
DBO lost less than 1% in the past five trading sessions while it is
up around 6% in the year-to-date period.
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US BRENT OIL FD (BNO): ETF Research Reports
PWRSH-DB OIL FD (DBO): ETF Research Reports
US-OIL FUND LP (USO): ETF Research Reports
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