Oil’s war-driven volatility pulls in record retail money, fueling 'meme-style' trading
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Net retail buying of oil ETFs hit a record $211 million on March 12, surpassing the previous peak seen during the market turmoil in May 2020, according to Vanda Research.
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In this article USO Follow your favorite stocks CREATE FREE ACCOUNT Oil prices slipped on Monday, after U.S. President Donald Trump called on other countries to help safeguard the Strait of Hormuz. Bloomberg Creative | Bloomberg Creative Photos | Getty Images The Iran war news flow-driven oil moves are drawing retail investors into the world's most traded commodity, further fueling volatility. Small investors have poured record sums into oil-linked exchange-traded funds in recent weeks as prices have whipsawed amid the Middle East conflict and fears of extended disruptions to crude flows through the Strait of Hormuz. The rush has prompted some analysts to draw parallels with past retail trading frenzies in stocks such as GameStop or commodities such as silver, signaling that crude oil market could be exposed to "meme-style" trades. "Oil is now definitely a retail 'meme theme'. Retail investors have been piling into the major pure-play oil ETFs ever since the start of the Iran conflict," said Viraj Patel, global macro strategist at Vanda Research. Net retail buying of oil ETFs hit a record $211 million on March 12, surpassing the previous peak seen during the market turmoil in May 2020, according to data from Vanda Research. Having hit a record $42 million on March 6, the popular United States Oil Fund, or USO, clocked its third best day for retail inflows at $32 million last Thursday. The strategic reserves are not a permanent solution, of course, and crude oil will continue to trade like a 'meme stock' until the solution is peace. Thierry Wizman Macquarie The surge in retail participation comes as geopolitical tensions dominate oil markets, and especially as participation in oil markets has become easier, lowering barriers for individual investors. Retail traders can gain exposure throughs ETFs such as the USO or the United States Brent Oil Fund , while smaller futures contracts have also made direct trading more accessible. Traders have been closely watching the p...
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