Oil ETF's & The Return of $50 Oil (OIL, USO, OIH, DXO, DIG)

Oil flirted with the $50.00 handle today, which would be close to a 4-month high. This also marked the end of the April contract expiration, so now we roll over to May.  April delivery for light sweet crude had its the highest close since the start of December for the current front month contract.  As you will see, the ETF’s all tracked pretty much in-line today.

But where this gets interesting is that oil for May, the new front month contract after today, rose just short of $2.00 to $50.04.  So technically, $50.00 oil is back.   It seems that T. Boone Pickens’ call for $60 before $40.00 now technically is a 50/50 odds call, even though it wasn’t when he made that call.

iPath S&P GSCI Crude Oil Total Return Index ETN (NYSE: OIL) reflects the returns that are potentially available through an unleveraged investment in the West Texas Intermediate (WTI) crude oil futures contract plus the Treasury Bill rate of interest that could be earned on funds committed to the trading of the underlying contracts.  OIL rose 4.2% to $19.14 on just over 3 million shares.

United States Oil (NYSE: USO), the troubled oil ETF, is meant to reflect the pre-expense performance of the spot price of West Texas Intermediate light sweet crude oil.  It has been in trouble because of its size and because its derivative contracts can trade so many different targets to replicate the price of oil.  The USO rose 4.2% to $29.44 on 29.5 million shares.

Oil Services HOLDRs (NYSE: OIH) offers undivided beneficial ownership of the underlying shares of common stock of companies in the oil service industry.  These shares rose 3.3% to $76.61 on 9.7 million shares.

These are not the only oil ETF’s we track, but these are the major ETF’s we track that are not leveraged.  In the leveraged ETF universe, there are these two among others:

• PowerShares DB Crude Oil Double Long ETN (NYSE: DXO) rose 8.4% at $2.70 on 31.5 million shares;
• Ultra Oil & Gas ProShares (NYSE: DIG) rose 6.8% to $22.31 on 15.3 million shares.

JON C. OGG