Oil And Gas Prices Fall As Production Floods The Market: This 2X Leveraged ETF Tracks The Sector To The Downside
Portfolio Pulse from Melanie Schaffer
Oil and gas prices are declining due to high production, which is affecting related stocks and ETFs. The Direxion Daily S&P Oil & Gas Exp & Prod Bear 2X Shares (DRIP) rose by 2.5% ahead of the OPEC+ meeting, with the market expecting little change from potential cuts. Analysts have adjusted their ratings and price targets for Marathon Oil (MRO) and Exxon Mobil (XOM). DRIP, an inverse double-leveraged ETF, includes companies like Exxon, Occidental Petroleum (OXY), and Marathon Oil. The ETF has been on an uptrend since November 3, but shows signs of potential weakness. Direxion also offers a bullish counterpart ETF, the Direxion Daily S&P Oil & Gas Exp & Prod Bull 2X Shares (GUSH).
November 27, 2023 | 6:17 pm
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NEUTRAL IMPACT
DRIP, an inverse leveraged ETF tracking the oil and gas sector, rose by 2.5% but may show signs of weakness due to lower-than-average volume and potential changes in the uptrend.
DRIP's rise indicates a short-term positive reaction to the current market conditions, but the low volume suggests a lack of strong bullish momentum. The upcoming OPEC+ meeting and the ETF's recent performance pattern could lead to volatility, making the short-term impact neutral.
CONFIDENCE 70
IMPORTANCE 75
RELEVANCE 90
NEUTRAL IMPACT
GUSH, the bullish counterpart to DRIP, offers traders an opportunity to play the oil and gas sector positively, potentially benefiting from market conditions opposite to those impacting DRIP.
GUSH's role as a bullish leveraged ETF means it could benefit from conditions that negatively impact DRIP. However, the article does not provide specific performance data or market reactions for GUSH, resulting in a neutral short-term impact assessment.
CONFIDENCE 70
IMPORTANCE 50
RELEVANCE 50
NEUTRAL IMPACT
Marathon Oil's price target was lowered from $40 to $39 by Stifel analyst Derrick Whitfield, maintaining a Buy rating.
The price target adjustment for MRO is a moderate change, suggesting a slight recalibration of expectations rather than a significant shift in company outlook. The maintained Buy rating indicates continued analyst confidence, leading to a neutral short-term impact.
CONFIDENCE 80
IMPORTANCE 60
RELEVANCE 70
NEUTRAL IMPACT
Occidental Petroleum is part of the DRIP ETF with a 2.48% weight and may be indirectly affected by the ETF's performance and oil market trends.
OXY's inclusion in the DRIP ETF means its stock could be influenced by the ETF's movements and broader sector trends. However, as an individual stock, its direct impact from DRIP's performance is limited, leading to a neutral short-term impact.
CONFIDENCE 70
IMPORTANCE 50
RELEVANCE 50
NEUTRAL IMPACT
Exxon Mobil's price target was reduced from $139 to $133 by Mizuho analyst Nitin Kumar, who also maintained a Buy rating.
The reduction in XOM's price target reflects a cautious stance by the analyst in light of current market conditions, but the ongoing Buy rating suggests that the overall outlook remains positive. This creates a neutral short-term impact on the stock.
CONFIDENCE 80
IMPORTANCE 60
RELEVANCE 70