Prices of West Texas Intermediate (WTI) Crude Oil moved higher in New York trade, extending the recent rebound to a sixth straight session after a decline in US crude production eased concerns about deepening oversupply.
WTI futures settled up 19 cents at $44.93 per barrel after hitting a two-week high of $45.45 earlier in the day.
Supply disruptions in the Gulf of Mexico from Hurricane Cindy, as well as, increased demand for gasoline in front of the long July 4th weekend have also supported the move higher in Crude.
On June 23, we posted a report suggesting Crude Oil prices had become technically oversold and a reversion higher was likely. We are still looking for a extension of the move higher into the $46.50 area.
Investors looking to profit from higher Crude Oil prices can look to buy the BetaShare ETF with the symbol: OOO.
We started adding OOO to client portfolios in the $12.30 area.
We calculate that when WTI trades back to $46.50, the price of OOO will be near the $14.60 level, which is a reasonable area to take profits.
Over the last 4 weeks, the price of WTI Crude Oil has dropped over 20% from $52.00 to just under $42.00.
Increased shale production, more supply from Non-Opec nations and the unwinding of large speculative long positions have all factored into the recent price slide.
However, from a technical perspective, we consider the price risks asymmetrically skewed to the upside from current levels. The likelihood of some sort of weather or politically-base supply disruption should also be taken into account.
For investors looking for a pure-play in a rebound in Crude Oil prices, we suggest looking at the BetaShare ETF with the symbol: OOO.
Shares of OOO are currently trading at $12.20.
On June 8th, with WTI trading at $46.00 per barrel, shares of OOO traded as high as $14.30. We believe this is a reasonable trade dynamic for a a short-term rebound in the WTI Crude Oil price.