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Traders work on the floor of the New York Stock Exchange January 8, 2015. REUTERS/Brendan McDermid

Energy ETPs attract lion’s share of commodity inflows in 2014

LONDON – The collapse in the oil price attracted bargain hunters to energy exchange-traded products (ETPs) in 2014, with inflows leaping in December even as the sell-off in oil intensified, global data from BlackRock and ETF Securities showed.

Investors in the United States accounted for about 85 percent of the $3 billion-plus inflow into energy ETPs globally, ETF Securities, an issuer of ETPs, said.

“A lot of the flows were in WTI (U.S.) crude ETPs,” said Martin Arnold, global FX and commodity strategist at ETF Securities. “It’s U.S. investors looking at the U.S. economy.” Natural gas accounted for about 25 percent of the inflows.

Oil prices have tumbled by over 55 percent since June, with the sell-off accelerating after OPEC’s decision at its November meeting not to cut production. Some U.S. investors have taken the view the oil price has fallen too far, and will rebound as demand picks up and some of the excess shale oil production is curbed.

“As the crude oil price continued to slide into the end of the year, investors have started to hunt for the bottom,” said Stephen Cohen, chief investment strategist for iShares EMEA at BlackRock. “Energy equity ETPs saw similar flow trends.”

Related: US stocks plunge as the price of oil continues to crumble

The strong inflows into energy ETPs helped to offset the continued outflows from gold ETPs, which remained a drag on the asset class as a whole. Excluding gold, total net inflows amounted to $4.5 billion, ETF Securities said. With gold, commodities had net outflows of $30 million.

This was in sharp contrast to 2013, when a record $42.9 billion was withdrawn from commodity ETPs, and was achieved despite another year when prices tumbled.

The S&P GSCI, a well-followed commodity index, was down 33.1 percent in 2014 as a stronger dollar, over-supply issues and concerns about growth in China and Europe prompted big sell-offs in commodities.

Assets under management (AUM) ended 2014 down 20.6 percent at about $102 billion, ETF Securities said.

Arnold said almost all of the fall in AUM was due to price declines, as flows had proved quite resilient. This was particularly the case in the broad-basket commodity ETPs segment, which attracted some $1 billion for the year.

“Sentiment appears to be stabilizing, and the flows numbers support this,” he said. “Many commodities are now trading at or below their marginal cost of production, attracting some longer-term value investors.”


(Reporting by Claire Milhench, editing by David Evans)

This article was written by Claire Milhench from Reuters and was legally licensed through the NewsCred publisher network.