2024-06-04 15:13:40 ET
Summary
- 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 profits from significant oil price decreases. OPEC's actions suggest a more stable oil price range, reducing the likelihood of major price drops.
- The fund uses a laddered futures approach, with contracts expiring in August 2024, December 2024, and June 2025 to avoid front-month roll risks.
Thesis
Commodities have been a hot topic this year, showing a resurgence into 2024. The oil complex in particular has been the topic of debate among market participants, with the soft landing narrative not tallying up with sometimes softer than expected demand....
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For further details see:
SCO: With The OPEC Meeting Behind Us, Oil Prices Will Stay Supported