Trading Energy ETFs In Foreign Currencies: What To Focus On

Trading energy ETFs outside of US exchanges can be tricky, as it often means lower liquidity and some latency, but is it worth trying? Definitely!

Pump Jack, Oilfield, Oil, Fuel, Industry, Petroleum

Image Source: Pixabay

Let’s do a comparative study between the WTI Crude Oil (CL) and an Exchange-Traded Fund (ETF) tracking this energy commodity as the underlying asset.

Prelude

In the previous two-part series (see Part I & Part II), we presented different ways to trade energies such as stocks, ETFs, CFDs and futures. We saw that picking the right instrument or vehicle depended on businesses, regions, risk profiles, psychology, etc. So, today, as an example, we will compare the well-known WTI Crude Oil (CL) futures contract (quoted in US dollars) with a 2:1 (2x) leveraged ETF traded in Toronto, in Canadian dollars.

Crude Oil (CL) Futures Vs. Horizons BetaPro Crude Oil Leveraged Daily Bull ETF

Here is a comparison table between the two products:

CME/NYMEX WTI Crude Oil Futures
Codes: CL (Standard), MCL (Micro)
Currency: USD
Specs: CME (standard), CME (micro)

Horizons Crude Oil 2x Daily Bull ETF
Code: HOU
Currency: CAD
Specifications: Horizons ETFs

WTI Crude Oil Futures:
CL 
(Exchange: CME Group)
Higher liquidity
No management fees
Higher leverage
24-hour access
Cross-margining
Tighter correlation to physical market

Other Crude Oil ETFs (quoted in USD):
USO/UCO/DBO/USL/SCO/OILK/OIL

Lower liquidity
Low management fee
Lower leverage (2:1) and less risk
Easy access to the market
Less maintenance for position rolling
Read more: CME Group – ETF Database

Brent Crude Oil Futures:
(Exchange: ICE)

Brent Crude Oil ETF:
BNO 
(ETF Database)

And here are the latest charts:

  • CL:
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Disclaimer: All essays, research and information found in this article represent the analyses and opinions of Sunshine Profits' associates only. As such, it may prove wrong and be ...

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