Crude oil ETF cash-out reaches a record high as oil prices surpass $80

As the oil price surged and broke through $80, oil ETF investors rushed to cash out and withdraw.

Overall, oil ETFs recorded the largest weekly outflow of funds in over a year. According to Bloomberg, a basket of 14 oil ETFs saw a total outflow of over $400 million last week, the largest since March 2022.

Among them, the largest oil ETF, WisdomTree's Brent Crude ETF, set a record for the largest withdrawal since its inception. This ETF became the largest product in the field in January this year. Investors withdrew nearly $200 million from the ETF in just one day last week.

It is worth mentioning that WisdomTree's Brent Crude ETF has rapidly expanded in size. Investors flocked to this ETF at the end of last year, causing its assets under management to increase more than tenfold from around $200 million in December to the current level. Therefore, it is not difficult to understand the record withdrawal size.

Since the explosion in size of WisdomTree's oil ETF in December last year, overall trading has been in the range of 40-49.66. Last week, the ETF traded in the range of 46.71-48.53, with a closing price of 49.40 on Monday. In other words, most bottom fishers made a profit.

Another well-known ETF, the United States Oil Fund (USO), recorded the largest weekly outflow of funds since December last year. Similar ETFs also experienced large-scale withdrawals.

Thanks to strong demand prospects, OPEC+ production cuts, and traders betting that the Fed's interest rate hikes may soon end, oil prices surged in July, continuing the upward trend from June. WTI crude oil rose 15.8% in July, the best monthly gain since January last year, while Brent crude rose 14.2%, the best monthly gain in over a year. On Monday of this week, oil prices rose again, up more than 1%, after five consecutive weeks of gains.

Against the backdrop of rising oil prices, as of Monday's close, WisdomTree's Brent Crude ETF has risen by 21% from its low point in May. The United States Oil Fund (USO) has risen by about 22% from its low point in May.

In the futures market, according to data from the U.S. Commodity Futures Trading Commission (CFTC) as of the week ending July 25, bullish sentiment for crude oil reached a three-month high. This data has a few days lag compared to the aforementioned ETF data.

Specifically, in the week ending July 25, speculators increased their net long positions in NYMEX WTI crude oil by 18,819 contracts to 192,104 contracts, reaching a three-month high. Net long positions in Brent and WTI crude oil increased by 29,392 contracts to 374,967 contracts, also reaching a three-month high.