Crude oil ETFs hit intraday limit-up on surging oil prices as investors pile in

As international oil prices spiked on heightened "Middle East risk," crude oil-related exchange-traded products (ETPs) soared. With geopolitical uncertainty rising, money is flowing into these products on expectations that oil prices will keep climbing for the time being.
According to the Korea Exchange (KRX) on the 9th, KODEX WTI Crude Oil Futures ETF (Hedged) jumped 29.31% and TIGER Crude Oil Futures Enhanced (H) gained 26.93% by the close. Both products also hit their intraday upper price limits during the session.
Over the past week, KODEX WTI Crude Oil Futures ETF (Hedged) surged 60.17%, while TIGER Crude Oil Futures Enhanced (H) rose 57.71%. They ranked first and second, respectively, in Exchange-Traded Fund (ETF) performance.
The rally came as international oil prices spiked amid the war involving the United States of America (U.S.), Israel and the Islamic Republic of Iran. As of 3:30 p.m. that day, West Texas Intermediate crude oil (WTI) futures on the New York Mercantile Exchange (NYMEX) were up more than 15%, pushing above 100 dollars per barrel. On the 5th and 6th, WTI had already climbed 21.75%.
Rising oil prices are drawing in investment capital. According to Koscom’s ETF Check service, KODEX WTI Crude Oil Futures ETF (Hedged) saw a net inflow of 59.7 billion won over the two trading days of the 5th and 6th.
Considering that over the past month the product had seen average daily net flows of only 400 million to 2 billion won, the pace of inflows has accelerated sharply.
During the same period, TIGER Crude Oil Futures Enhanced (H) also recorded a net inflow of 8.9 billion won. For this product, average daily net flows over the past month had been just about 200 million won.

In the Exchange-Traded Note (ETN) market, all of the top 10 performers over the past week were oil-related leveraged products. Shinhan Bloomberg Leveraged WTI Crude Oil Futures ETN B skyrocketed 150.42% in a week, taking the top spot.
Other strong performers included Samsung Securities Samsung Leverage WTI Crude Oil Futures ETN, up 145.58%; Korea Investment Securities KIS Bloomberg Leverage WTI Futures ETN B, up 144.87%; Samsung Bloomberg Leverage WTI Crude Oil Futures ETN B, up 144.66%; KB S&P Leveraged WTI Crude Oil Futures ETN B, up 144.35%; and Hana S&P Leverage WTI Futures ETN B, up 143.50%. All of them delivered returns in the 140% range.
Trading value also surged. From the 3rd through that day, the combined trading value of the top 10 ETNs by weekly return reached 214 billion won, about eleven times higher than the 19.3 billion won recorded a week earlier.
If the Iran crisis drags on, the upward trend in international oil prices is expected to continue.
Oh Jae-young, a researcher at KB Securities, said, "We see the upper bound for oil prices around 120 to 130 dollars, which was the peak during the Russo-Ukrainian War. This is a strong resistance zone, so we do not expect it to be broken easily in the short term." He added, "However, if the U.S.-Iran crisis becomes prolonged and damage spreads to multiple energy facilities across the Middle East, we believe the upper bound for oil prices could open up to 150 dollars."
Kim Kwang-rae, a researcher at Samsung Futures who analyzes international commodity and energy markets, noted, "The United States Secretary of Energy said that even in the worst case, the recent spike in oil prices should ease within a few weeks, and that what we are seeing now is a bit of a fear premium in the market." He went on, "That said, the prolonged closure of the Strait of Hormuz by the Islamic Republic of Iran and production cuts caused by export suspensions in Middle Eastern countries continue to exert upward pressure on oil prices."

jisseo@fnnews.com Seo Min-ji Reporter