Oil And Gas Stocks Tank With Record Supply Fueling Sector Sell Off: This Inverse ETF (DRIP) Offers A 200% Return
Portfolio Pulse from Melanie Schaffer
Oil and gas stocks are declining due to a record supply that is outpacing demand, leading to a sector sell-off. The Direxion Daily S&P Oil & Gas Exp & Prod Bear 2X Shares (DRIP) rose by 4.5% as it benefits from the downturn in the sector. OPEC+ nations' new oil cuts and U.S. record oil production have not prevented the decline. Analysts have turned bearish, with downgrades for Marathon Oil (MRO) by Morgan Stanley and a lowered price target for Exxon Mobil (XOM) by JP Morgan. DRIP, an inverse double-leveraged ETF, is in a bull cycle and could rally towards $14.50. Direxion also offers a bullish counterpart, the Direxion Daily S&P Oil & Gas Exp & Prod Bull 2X Shares (GUSH), for traders bullish on the sector.
December 12, 2023 | 5:47 pm
News sentiment analysis
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NEGATIVE IMPACT
Marathon Oil was downgraded by Morgan Stanley from Overweight to Equal Weight with a price target reduction, indicating potential short-term pressure on the stock.
The downgrade by a major analyst firm like Morgan Stanley can have a significant negative impact on investor sentiment and the stock's short-term performance.
CONFIDENCE 85
IMPORTANCE 80
RELEVANCE 90
NEGATIVE IMPACT
The United States Oil Fund fell to a five-month low, indicating bearish sentiment in the oil market which could continue to impact USO negatively in the short term.
USO's decline to a five-month low reflects the current oversupply in the oil market, which is likely to continue exerting downward pressure on the fund.
CONFIDENCE 80
IMPORTANCE 85
RELEVANCE 80
NEUTRAL IMPACT
GUSH, the bullish counterpart to DRIP, offers traders an opportunity to invest in the oil and gas sector's potential recovery, although current trends favor DRIP.
GUSH is mentioned as an alternative for bullish traders, but the current market conditions and the article's focus on DRIP's success suggest a neutral short-term impact for GUSH.
CONFIDENCE 75
IMPORTANCE 60
RELEVANCE 70
NEUTRAL IMPACT
Occidental Petroleum is mentioned as part of the ETF DRIP, but no specific news or analyst actions are reported, suggesting a neutral short-term impact.
OXY is included in DRIP's holdings, but the article does not provide any specific news that would directly impact OXY's stock in the short term.
CONFIDENCE 75
IMPORTANCE 50
RELEVANCE 50
NEUTRAL IMPACT
Exxon Mobil had its price target lowered by JP Morgan, though it maintained an Overweight rating, suggesting mixed short-term implications for the stock.
While the price target reduction is negative, the maintenance of an Overweight rating by JP Morgan could mitigate the impact, leading to a neutral short-term outlook for XOM.
CONFIDENCE 80
IMPORTANCE 70
RELEVANCE 80
POSITIVE IMPACT
DRIP, an inverse ETF, rose by 4.5% and is expected to continue its upward trend in the short term, potentially rallying towards $14.50.
DRIP's rise is directly related to the downturn in the oil and gas sector, and its structure as an inverse ETF means it benefits from declines in the sector. The technical analysis suggests a continued upward trend.
CONFIDENCE 85
IMPORTANCE 90
RELEVANCE 100