Leveraged bull oil ETFs surged in early trading Wednesday as headlines around the world indicated that OPEC oil ministers are unanimously in favor of a production cut.
Crude oil futures were up 7%, with WTI crude oil jumping to $48.46 on the news. The headline everyone seems to be focusing on is the Iraqi oil minister’s statement. From Bloomberg:
Iraqi Oil Minister Jabbar al-Luaibi said OPEC ministers were unanimous in favor of an output cut, following a breakfast meeting in the city on Wednesday. Iran Oil Minister Bijan Namdar Zanganeh said Russia, the largest non-OPEC producer, was ready to abandon its previous position and participate in curbing production.
“I am very optimistic we’re going to come with very fruitful results,” al-Luaibi said, before sitting down for the final ministerial meeting. “There will be a cut, yes, definitely.”
Reportedly, the latest proposed measure would require a six-month production cap commitment from member nations. A committee would also likely be formed for the purpose of monitoring the arrangement to make sure that participating countries actually adhere to the agreement.
Nigeria’s oil minister also made comments this morning expressing optimism that OPEC would probably complete the deal today.
This morning’s big oil price gain is pushing leveraged oil bull plays much higher today. The double leveraged ProShares Ultra DJ-UBS Crude Oil (NYSE:UCO) rose $1.20 (+13.76%) to $9.92 per share in Wednesday morning trading.
Meanwhile, the triple leveraged VelocityShares 3X Long Crude ETN linked to the S&P GSCI Crude Oil Index Excess Return (NYSE:UWTI), which will actually be shut down next month, surged $3.76 (+21.05%) to $21.62 per share on Wednesday morning.