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Long oil ETCs see largest inflows on record following oil price plunge


Long oil exchange-traded commodities saw USD220m of inflows last week, the largest weekly inflow on record, according to ETF Securities.

ETFS Crude Oil saw USD123m of new flows, the largest since it was listed in September 2006.

This is the second consecutive week of large inflows into long oil ETCs following 11 consecutive week of outflows. Total inflows over the past two weeks are up USD317m.

These inflows have come after brent oil spot prices have dropped to near USD70/bbl (down 21 per cent over past 3 weeks), indicating a number of investors are viewing this as a good accumulation level.

US-listed ETFS Gold Trust saw USD72m of new flows last week, the largest inflows since listing on September 2009.

Over the past month it has primarily been ETFS’ European listed gold ETCs that have seen inflows as the European debt crisis has caused European investors to diversify Euro holdings into gold. With US-based investors again stepping up their purchases of gold it appears that the potential impact of the Euro crisis on global financial system stability and growth is now causing US investors to also become more risk averse.

ETFS Palladium Trust saw USD27m of new flows despite falling palladium prices.

Trading volumes in ETCs rose from USD2.1bn to a new record of USD2.6bn last week as precious metals and energy ETCs saw strong flows. Around 70 per cent of trading was in precious metals, with gold accounting for 40 per cent of this and platinum and palladium around 17 per cent.

Trading in energy ETCs jumped as well, with energy ETCs accounting for 23 per cent of all ETC trading last week. Oil ETC trading rose to USD500mn, a 250 per cent increase over month ago levels.

Nine of the top ten best performing long ETCs last week were agriculture-based, with ETFS Sugar leading the way with a return of 10.7 per cent. Sugar prices have been supported in recent weeks by the ongoing political tensions in Thailand, the world’s second largest sugar exporter.

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