3 ETFs For Shorting Oil (USO, USL, DUG)

Goldman Sachs put out a note this week that it sees oil prices dropping sharply, and as such, the price of black gold has dropped sharply, down to $106 per barrel for West Texas Intermediate crude as of the time of this article. Here are a few ETFs to consider making some money from the price of oil dropping. Traders could go the traditional route, and short the major oil ETF, the United States Oil Fund L.P. USO. They could also take advantage of an oil ETF which goes out further on the curve, and holds all 12 monthly oil contracts, the United States 12 Month Oil Fund, LP USL. The difference between USO and USL is that USO only holds the front month contract, so every month, the contract changes, and could be subject to contango. Contango is when prices in future months are higher than the current month. The last ETF to consider is ProShares UltraShort Oil & Gas ETF DUG, which actually shorts the oil & gas index. From the company's prospectus: "The investment seeks daily investment results, before fees and expenses, which correspond to twice (200%) the inverse (opposite) of the daily performance of the Dow Jones U.S. Oil & Gas IndexSM." This is a leveraged ETF, so traders should be aware that the underlying derivatives will cause it to directly follow the price of oil, as the other two ETFs generally do. This should be a short-term trade only.