UWTI: ETF for oil

M

MrJayHyung

Hello, guys. First of all, I am new here so let me know if this thread doesn't belong here or if there's any other administrative problem.


As many traders in this forum have surely noticed, the oil price is hitting the new lowest point, although we are observing a sort of minor rebound at this point. However, I certainly believe that in the longer term--about in few weeks or months, the price will be stabilized at around $70, if not higher.


To invest according to this logic, I was trying to find a suitable product, and I finally came down to "VelocityShares 3x Long Crude ETN linked to the S&P GSCI Crude Oil Index Excess Return", which, in short, is UWTI.
(I guess U stands for the "up.")


I am wondering if anyone has ever invested his money in this etf and also questioning if it will be good idea to buy and hold this product for few months, until the price gets back to the normal range. If so, it will be great to let me know the things I should know before executing the transaction with my broker.


Oh, and actually, I looked up in etf website and it said:
"As a levered product, UWTI is not a buy-and-hold ETF; it’s a short-term tactical instrument. " So I am little hesitated to fully decide to invest. For those of you who wants the link, it's here: http://www.etf.com/UWTI


Hope you guys can share some comments either on UWTI or on general opinion regarding the oil industry and/or oil-related investment products.


Thank you so much in advance!
Cheers.
 
MrJayHyung said:
Hello, guys. First of all, I am new here so let me know if this thread doesn't belong here or if there's any other administrative problem.


As many traders in this forum have surely noticed, the oil price is hitting the new lowest point, although we are observing a sort of minor rebound at this point. However, I certainly believe that in the longer term--about in few weeks or months, the price will be stabilized at around $70, if not higher.


To invest according to this logic, I was trying to find a suitable product, and I finally came down to "VelocityShares 3x Long Crude ETN linked to the S&P GSCI Crude Oil Index Excess Return", which, in short, is UWTI.
(I guess U stands for the "up.")


I am wondering if anyone has ever invested his money in this etf and also questioning if it will be good idea to buy and hold this product for few months, until the price gets back to the normal range. If so, it will be great to let me know the things I should know before executing the transaction with my broker.


Oh, and actually, I looked up in etf website and it said:
"As a levered product, UWTI is not a buy-and-hold ETF; it’s a short-term tactical instrument. " So I am little hesitated to fully decide to invest. For those of you who wants the link, it's here: http://www.etf.com/UWTI


Hope you guys can share some comments either on UWTI or on general opinion regarding the oil industry and/or oil-related investment products.


Thank you so much in advance!
Cheers.
More...

I've been burned by UWTI in the past, and can confirm that it is NOT a good instrument for trading oil. Intraday gaps can kill you, as the index is comprised of derivatives that are rebalanced each night. It would be a great tool if in fact it did closely align itself to crude or the drillers, but it doesn't.

You'll have better luck with oil by pulling out your Black & Decker and punching a hole in your backyard.
 
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I know most of these 3x etfs aren't buy and hold but if you look some runs on some of the 2x and 3x etfs you can see that if you timed some of them perfectly you could have held the entire time...
Look at QLD since the market bottomed...up hundreds of percent....UWM same thing along with TNA...

So if you want in on UWTI and think oil is headed to $70 you can make it a buy and hold simply by not buying in all at once...buy a 1/4 shares at $3.50 buy more around $3 and if it drops further by more...I was ready last week to buy around 500 shares around $3.10 and add more lots of 500 shares under $2.75 and again under $2.50...didn't think it would surge even higher today....many think the oil bottom is in. I don't think it is...I think will see $40s again..
Will buy UWTI under $2.75 at that point for long term however buying now is not a bad idea if you think oil is headed to $70+ that would be a really great return ....check out how volatile DWTI has been the last 2 weeks ...
 
S2007S said:
I know most of these 3x etfs aren't buy and hold but if you look some runs on some of the 2x and 3x etfs you can see that if you timed some of them perfectly you could have held the entire time...
Look at QLD since the market bottomed...up hundreds of percent....UWM same thing along with TNA...

So if you want in on UWTI and think oil is headed to $70 you can make it a buy and hold simply by not buying in all at once...buy a 1/4 shares at $3.50 buy more around $3 and if it drops further by more...I was ready last week to buy around 500 shares around $3.10 and add more lots of 500 shares under $2.75 and again under $2.50...didn't think it would surge even higher today....many think the oil bottom is in. I don't think it is...I think will see $40s again..
Will buy UWTI under $2.75 at that point for long term however buying now is not a bad idea if you think oil is headed to $70+ that would be a really great return ....check out how volatile DWTI has been the last 2 weeks ...
More...

After reading few opinions and more articles, I am starting to question if we have already seen the bottom of oil or not. This articles especially points out that we didn't. Check this out and I hope you do great with your investment. Thank you very much for your comment and opinion. Cheers!

Here's the link: http://www.bloomberg.com/news/artic...unge-to-20-and-this-might-be-the-end-of-opec-
 
Gartmans calls are usually off, but in the last 2 days there have been predictions for $20 oil, how true this is I don't know, I just find it amusing that everyone is predicting lower oil prices after the fact oil is down over 50% from its highs. There wasn't one prediction of $50 oil when it was trading between $80-$100; a barrel, does oil drop another 50%, hard to tell, if there is another financial collapse coming then yes $20 is certainly coming, are lows in the 40's coming back, I think yes to that one as well, at least an 80% chance we see oil back at 2015 lows.



$20 oil 'is still possible': Gartman
Holly Ellyatt | @HollyEllyatt
2 Hours AgoCNBC.com
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COMMENTSCNBC's "Worldwide Exchange" Tuesday.

"We've seen the market continue to have a large contango (where people are willing to pay more for a commodity at some point in the future than the actual expected price of the commodity) and crude continues to bid for storage," Gartman said.

Gartman illustrated his point with a reference to the oil storage hub in Cushing in Oklahoma where an estimated 2.3 million barrels of oil is stored in tanks, according to oil service company Genscape, and "huge numbers of ships out on the water" also being used to stockpile oil.

"In that environment it's very hard to think that this is anything more than a much-needed technical bounce and any further $1 or $2 rally in crude oil probably should be sold. I think the lows have not yet been seen and maybe $20 a barrel is still possible."

Gartman's comments come after Citigroup published a report on Monday stating that oil prices – which have fallen 50 percent from around $114 per barrel last June to currently trade around $57 – could fall as low as $20 per barrel .

"It's impossible to call a bottom point, which could, as a result of oversupply and the economics of storage, fall well below $40 a barrel for WTI, perhaps as low as the $20 range for a while," Citi's head of global commodities research Edward Morse said in the report Monday. "The recent rally in crude prices looks more like a head-fake than a sustainable turning point."

The comments come amid a number of reports that signal a slow recovery in oil markets. On Tuesday, the International Energy Agency said that while the rebound in prices of late showed there was "light at the end of the tunnel," it "could take years" for the market to rebalance.

- By CNBC's Holly Ellyatt,
 
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