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Crippled Crude Oil Presents Conundrum For These Russia, Saudi Arabia ETFs

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Crippled Crude Oil Presents Conundrum For These Russia, Saudi Arabia ETFs

It's not even Wednesday and it's fair to say oil futures and the related exchange traded products are having wild weeks. At this writing Tuesday, the popular United States Oil Fund (NYSE: USO) is lower by almost 30%.

USO, which tracks front month West Texas Intermediate (WTI) futures, but is altering to include the next month of contracts, too, resides 81% below its 52-week.

Things are so bad in the oil patch that Barclays, the issuing bank of the iPath Series B S&P GSCI Crude Oil Total Return Index ETN (NYSE: OIL) is pulling the plug on that product, saying earlier it will be liquidate on April 30.

OIL's liquidation announcement marks the latest in a string of similar reveals affecting rival products, but there are other avenues for traders to be aware of in the oil patch or short for potential profits. That includes the following country exchange traded funds.

VanEck Vectors Russia ETF (RSX)

As one of the world's largest crude producers and by virtue of its price war with Saudi Arabia – the one that hastened the current oil collapse – Russia is one of the ex-U.S. epicenters of the commodity's spectacular decline and that's bad news for the VanEck Vectors Russia (NYSE: RSX).

RSX, the largest Russia ETF trading in the U.S., reflects that economy's dependence on the energy sector by allocating almost 40% of its weight to that group.

The Russia ETF sports a whopping 8.79% dividend yield, which interestingly enough, may be safe because Moscow is likely loathe to allow state-run oil giants to pare payouts.

See Also: 'An Outlier Event': Experts React To Oil Prices Dropping Below $0

iShares MSCI Saudi Arabia ETF (KSA)

With Saudi Arabia being the kingpin of the Organization of Petroleum Exporting Countries, the iShares MSCI Saudi Arabia ETF (NYSE: KSA) is a “must include” on this list. KSA follows the MSCI Saudi Arabia IMI 25/50 Index.

KSA holds 72 stocks, just under 7% of which are energy names, but that doesn't diminish the importance of oil on this fund's price action. Oddly enough, KSA could emerge a winner of sorts amid the oil's decline.

“Saudi Arabia will be best positioned to weather the impact of an unprecedented collapse in U.S. oil prices,” according to CNBC.

iShares MSCI Canada ETF (EWC)

Remember WTI prices turning negative on Monday? Things weren't much better north of the border, indicating the 22% year-to-date loss sported by the iShares MSCI Canada ETF (NYSE: EWC) could be poised to increase.

West Canada Select (WCS) is going for $12 a barrel, a massive decline from prior highs. Then there's Canada's geographic disadvantage. It has to get its oil to the Gulf of Mexico, an expensive undertaking when oil is going up, but a punitive one in bear markets.

There's only so much Shopify (NYSE: SHOP) can do to prop up EWC (the stock is the ETF's third-largest holding) and it won't be enough to buffer the fund against falling oil prices.

 

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