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Inflows into long oil ETCs soar as crude price dips below USD40


Long oil exchange traded commodity inflows rose by USD97m last week, the largest rise since oil ETCs were first listed in 2005, according to ETC provider ETF Securities, highlighting an in

Long oil exchange traded commodity inflows rose by USD97m last week, the largest rise since oil ETCs were first listed in 2005, according to ETC provider ETF Securities, highlighting an increasingly bullish investor stance toward oil even as its price has dropped below USD40 per barrel. The shares outstanding of long oil ETCs have risen sixfold, from three million to 18 million, in just over six weeks.

The outstanding share levels for ETFS Crude Oil, ETFS Brent Oil, ETFS WTI Oil and ETFS Leveraged Oil are all currently at record highs, while ETFS Short Crude Oil, which moves inversely to the daily movement of the oil price, has experienced negative flows for 11 consecutive weeks.

ETF Securities notes that net long positions in oil ETCs have moved inversely to the oil price, with investors reducing net longs as the price has risen and increasing positions as it has declined.

Physically backed gold ETCs also experienced a sharp rise in inflows last week with combined flows into ETFS Physical Gold and Gold Bullion Securities rising by USD101m, the second largest increase in the past 10 weeks. Net inflows this year now total USD1.7bn.

Flows into physically-backed gold ETCs highlight investors concerns about the outlook for the US dollar, sterling and other major currencies, the company says, as central banks inject large amounts of paper currency into the financial system and debt burdens are poised to surge as governments ramp up fiscal stimulus measures.

Strong flows into physical gold ETCs are also likely to reflect investors’ desire to hold tangible assets as concerns about counterparty and credit risk continue to rise, ETF Securities says. The two products are backed by allocated gold bars stored in vaults and are not exposed to credit or counterparty risk. So far this year the gold price is up 27 per cent in sterling terms and 13 per cent in euros.

Last week, ETFS Physical Platinum saw net inflows of USD5.4m, while its price increased by 6 per cent, with inflows on a rising trend since bottoming in mid-November. There has also been a pick-up in interest in ETFS Agriculture, with inflows rising for five consecutive weeks.

The top five performers last week were ETFS Leveraged Wheat, which gained 20 per cent, ETFS Short Lead (up 18 per cent), ETFS Leveraged Zinc (18 per cent), ETFS Leveraged Cocoa (16 per cent) and ETFS Short Crude Oil (13 per cent).

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