At the start of this year, oil prices plunged to below $30 per barrel on concerns over a supply glut. Since mid-2014, oil has come under significant pressure as Saudi Arabia has continued to pump oil despite an oversupplied market. In the last two months though, oil has staged a strong recovery.
The rally has been partly fueled by expectations that Saudi Arabia will freeze production. However, the main reason for oil’s strength is the potential rebalancing of the market. Production in the U.S. has been declining. To add to this, there have been supply disruptions.
Earlier today, oil prices rallied on concerns over supply from Canada and Libya. Indeed, supply disruptions are likely to push prices even higher in the near-term. This is why betting on oil could be a good strategy. Investors can even double their return by going long on the Horizon’s BetaPro NYMEX Crude Oil Bull Plus ETF (TSX: HOU).
The fund is up more than 2% in trading today. In the last month, it has returned more than 38%. Year-to-date, though, HOU still remains down more than 11%. However, with oil rallying, the fund could potentially erase its losses for the year.
