The crude oil market was rather muted on Thursday due to the US Thanksgiving celebrations. However, USO ETF extended its previous gains, having bounced off its one-month low. ...

Core Viewpoint - Oil-focused ETFs are experiencing pressure due to OPEC+'s announcement to increase production, raising concerns about an oversupplied market [1][2]. Group 1: ETF Performance - The United States Oil Fund (USO) and United States Brent Oil Fund (BNO) fell over 5% in the past week as speculation about OPEC+'s production increase grew [2]. - Leveraged products like ProShares Ultra Bloomberg Crude Oil (UCO) saw larger losses, down about 10% in the past week, reflecting their amplified exposure to crude price movements [3]. - Equity-based funds such as the Energy Select Sector SPDR Fund (XLE) and VanEck Oil Services ETF (OIH) were more insulated, losing around 1.7% during the same period, with companies like ExxonMobil and Halliburton expected to benefit from increased drilling activity [4]. Group 2: Geopolitical Risks - The OPEC+ production increase occurs amid rising geopolitical tensions, with potential U.S. secondary sanctions on China for importing Russian crude, similar to actions taken against India [5]. - Investors may seek to reduce exposure to geopolitical risks by considering globally diversified resource ETFs like SPDR S&P Global Natural Resources ETF (GNR) and FlexShares Global Upstream Natural Resources ETF (GUNR) [5]. Group 3: Market Outlook - As oil markets adjust to the upcoming supply increase, ETF investors may need to shift strategies, with futures-heavy funds likely facing continued challenges, while equity-based or globally diversified funds may provide more stability in the coming months [6].