What Are WTI ETFs?

There are a number of ETFs offering exposure to light sweet crude oil, also known as West Texas Intermediate (WTI). The most popular is the United States Oil Fund (USO), which invests primarily in front month contracts. As such, USO will maintain a high sensitivity to spot prices but may be subject to adverse impact of contango over the long term.

Oil ETFs are primarily distinguished by the types of futures contracts held. The United States 12 Month Oil Fund (USL) spreads exposure evenly across 12 separate futures contracts, minimizing the impact of the roll yield on returns. Teucrium\'s Crude Oil Fund (CRUD) spreads exposure across three unique maturities, a strategy that was designed to more closely replicate movements in spot prices. PowerShares offers an oil ETF (DBO) that may change its roll process depending on current market situations; the methodology is designed to minimize the impact of contango and maximize and positive effects of backwardation.

There are also several ETFs that focus on equities of companies engaged in the production of crude oil. The most popular choice, the Energy SPDR (XLE) includes exposure to mega cap companies such as Exxon Mobil and Chevron. The iShares S&P Global Energy Sector Fund (IXC) delivers more global exposure, investing in international companies as well as domestic energy producers. Another interesting option is the Global X Oil Equities ETF; that fund offers exposure to companies whose stock prices have exhibited a strong correlation with spot oil historically.

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