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Oil ETC volumes up 400 per cent year-on-year as inflows reach new highs

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ETF Securities Limited says it has seen a surge of inflows into long oil ETCs this year as the oil price plunged through the USD50/bbl level.  

ETF Securities Limited says it has seen a surge of inflows into long oil ETCs this year as the oil price plunged through the USD50/bbl level.  

Since the beginning of the year oil ETCs have seen USD898m of inflows and USD1.3bn since 1 November 2008. Flows into oil ETCs have surpassed even the USD1.2bn of flows into ETF Securities ‘ physically-backed gold ETCs since November, highlighting extremely bullish investor sentiment towards oil returns.

The oil ETCs that have seen the largest inflows over this period are USD607m into ETFS Crude Oil, USD329m into ETFS Brent 1mth, USD141m into ETFS Leveraged Crude Oil and USD125m into ETFS WTI 2mth. 

ETFS Short Crude Oil, which moves inversely to the oil price, has seen USD343m of outflows since peaking in August of last year, taking investors net long positions in Oil ETCs to their highest level on record.

Last week, ETF Securities recorded its largest single trade in an ETC that tracks longer-dated oil futures, with USD43mn invested in ETFS Brent 1yr, highlighting the interest in ETCs across all maturities including longer dated oil. 

Trading volumes in oil ETCs have surged, with average weekly trading volumes this year up 400 per cent compared to year ago levels. The four most traded oil ETCs in order of trading value are ETFS Crude Oil, ETFS Leveraged Crude Oil, ETFS Brent 1mth, and ETFS WTI 1mth which together have traded an average of USD210m per week since the start of this year.

In February, ETFS Leveraged Crude Oil was the third most traded ETF/ETC on the London Stock Exchange behind Gold Bullion Securities. ETFS Crude Oil and ETFS Brent 1mth were ranked fifth and eighth respectively.

ETF Securities believes the surge in demand for oil ETCs is being driven by strong demand for simple, transparent and liquid methods of gaining exposure to oil prices, and investors’ view that oil prices will rise from current levels to reflect longer-term supply-demand fundamentals, following the collapse of oil prices in the second half of last year.

Meanwhile, ETFS Carbon is up 43 per cent over the past month and is the best performing ETC over that period. ETFS Carbon was launched in November 2008 offering investors, for the first time ever in Europe, the opportunity to gain simple and direct exposure to the carbon emissions allowance futures market. 

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