Here’s Why the UWTI is Hitting New All-Time Lows Today

Image of oil drumsThe VelocityShares 3x Long Crude Oil ETN (NYSE:UWTI) had bounced strongly off its recent lows amid an oil price recovery, but today the triple leveraged bull play is hitting new all-time lows.

That’s because oil prices are seeing a near 3% drop in very volatile trading. Several factors are contributing to oil’s quick decline, including:

  • Reports that Iraq will boost its oil exports by about 5% per day,
  • Higher Chinese oil exports,
  • Barclays analysts issuing cautious comments on oil after its 25% bounce this month,
  • Friday’s U.S. rig count data that showed a 10 rig increase to 491,
  • A strengthening U.S. dollar, and
  • A lack of continued short covering (which was a large factor in the price bounce, as bearish oil traders closed out their positions).

Traders have flocked to UWTI amid oil’s big comeback as of late, but the triple leveraged nature of the ETN makes it extremely volatile and sensitive to short-term price movements.

UWTI-2016-08-22

The UWTI fell $1.90 (-6.69%) to $26.49 per share in premarket trading Monday. The largest leveraged oil ETF, which returns about triple the daily price movement in WTI oil, has lost 28% of its value since the start of 2016.

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