Soaring Oil Prices Ignite Oil ETFs... Individuals Bet on a Decline

KODEX WTI Crude Oil Futures (Hedged) Jumps 24.52% in One Month
International Oil Prices Soar Over 18% This Month
Individuals Bet on Declining Oil Prices with Net Purchases of Inverse ETFs
Oil Prices Expected to Remain Strong for Now, May Rise to $110–$120 Levels

Recently, as geopolitical risks in the Middle East have intensified and international oil prices have soared past $100 per barrel, oil exchange-traded fund (ETF) returns have surged dramatically. However, individual investors are betting on a decline in oil prices, deeming crude oil to have reached a short-term peak, and are therefore purchasing inverse ETFs.

According to ETF Check on September 16, over the past month, KODEX WTI Crude Oil Futures (Hedged) rose by 26.07%, while TIGER Crude Oil Futures Enhanced (Hedged) gained 24.06%. Excluding leveraged and inverse products, these two ETFs ranked first and second in overall returns among all ETFs.

KODEX WTI Crude Oil Futures (Hedged), which posted the highest return, tracks the nearest-month WTI crude oil futures traded on the New York Mercantile Exchange. TIGER Crude Oil Futures Enhanced (Hedged), which ranked second, features a flexible strategy that adjusts the contract month of oil futures in response to market trends, aiming to minimize rollover costs when switching contracts.

Both products are representative ETFs enabling indirect investment in the U.S. WTI futures market using Korean won. Through currency hedging (H), they are designed to eliminate exchange rate risks and track only movements in oil prices.

The strong performance of these oil ETFs is attributed to the recent sharp rise in oil prices. On September 14 (local time) at the London ICE Futures Exchange, November delivery Brent crude oil futures closed at $105.68 per barrel, up 1.02% from the previous session. Intraday, Brent prices exceeded $109 per barrel. At the New York Mercantile Exchange (NYMEX), October delivery West Texas Intermediate (WTI) futures also closed up by 1.34% at $101.39 per barrel, continuing their upward trend. Both have climbed more than 18% so far this month.

Despite the strong performance of oil ETFs amid the surge in oil prices, individual investors are purchasing inverse ETFs to bet on a decline. Over the past week, individuals made net purchases amounting to 47.1 billion won of KODEX WTI Crude Oil Futures Inverse (Hedged), and also bought 5.6 billion won worth of TIGER Crude Oil Futures Inverse (Hedged).

According to the securities industry, the rally in oil prices is expected to persist for the time being. This is due to ongoing military tensions and unresolved geopolitical instability in the Middle East, as well as continued concerns over potential supply disruptions along major maritime routes. With armed conflict between the United States and Iran ongoing, Saudi Arabia has shut down a key oil pipeline bypassing the Strait of Hormuz following drone attacks by the Houthi rebels.

Oh Jae-young, a research analyst at KB Securities, stated, "If the Bab-el-Mandeb Strait, the gateway to the Red Sea, is blockaded by Houthi rebels, international oil prices could well surpass the previous high of $120 per barrel." He added, "Even if the Red Sea Strait issue does not escalate to an extreme, unless the US-Iran conflict comes to a swift resolution, upward pressure on international oil prices will remain persistent." He further noted, "The next significant price levels are expected to be in the $110–$120 per barrel range—peaks last reached at the outbreak of war—with a high probability of reaching these levels."

This content was produced with the assistance of AI translation services.