Thursday, January 5

Today we saw generally bullish activity in our energy portfolio – yesterday’s crude inventory withdraw turned into a record setting increase in refined product inventory. A total of 18.4 million barrels of refined product were added. Fortunately refined products are not heavily correlated to coal or renewables, but our portfolio was hit. Some of this was offset by a weakening in the dollar, which is inversely correlated to energy commodities.

To elaborate on today’s news, yesterdays Crude oil inventory decrease of 7.1 million barrels has resulted in massive increases in refined product increases. Gasoline inventories are up 8.3 million barrels and Distillate inventories are up 10.1 million barrels. This is starting to paint a short term bearish picture for Crude oil prices (USO was down 0.30 at noon) however, there has been a significant rally later in the day – possibly attributable to a weakening dollar (down about 1.5% across all foreign currencies).

In the wake of the delisting of ProShare’s DWTI and UWTI ETNs late last year, investors have been struggling to find a replacement for the high degree of exposure to crude oil afforded by these leveraged ETNs. Shortly after the delisting Janus launched the replacements UWT and DWT backed by Citigroup, which have been trading since December 26th – but still with volume under 5 million per day. ProShares today announced two new ETNs to succeed the ones they delisted. They are called WTIU and WTID, and have been trading since this morning – albeit with a pathetic volume of 1000 units. We’ll definitely be keeping an eye on these notes to see if they become true successors to UWTI and DWTI.

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