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(Bloomberg) — An exchange-traded product that profits when oil prices fall is on track for its biggest monthly inflow since 2023 as investors correctly wagered that crude’s conflict-driven spike would prove short-lived.
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The ProShares UltraShort Bloomberg Crude Oil ETF pulled in cash in eight of the last nine sessions for which data are available, putting it on track for a monthly inflow of $121 million, according to data compiled by Bloomberg. The fund seeks to return twice the inverse of the daily performance of its underlying index.
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Oil prices have plummeted more than 10% over the past two sessions as a fragile detente between Israel and Iran reduced the risk to flows from the Middle East. While prices spiked at the onset of Israel’s bombing campaign, the escalation hasn’t materially affected oil exports. Iran’s retaliation spared energy infrastructure, and volumes through the Strait of Hormuz have continued as normal.
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As crude rallied this month, investors piled into the fund, sparking its biggest daily inflow since January in a bet that the supply scare would be the latest false alarm caused by the 20-month war. Selling oil’s geopolitical spikes has generally proved a successful trading strategy in recent years.
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The fast-evolving Middle East conflict pushed several gauges of volatility to yearly highs, catching the eye of sophisticated and generalist investors alike. The frenzy saw volumes of futures and options break several records, while oil’s bullish premium at one point soared to levels not seen since Russia’s invasion of Ukraine in 2022.
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