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Investors have taken a contrarian approach to oil ETPs this
year, shoveling in $8 billion in the first quarter on
expectations of an oil price rebound, then withdrawing $2.67
billion in the second quarter.
An 18 percent fall in Brent crude oil futures in July prompted
investors to return to the market, as many took the view that
prices had troughed.
"The oil price further corrected on greater inventory builds,
the expectation of incremental Iranian production coming to the
market, and dollar strength," said Wei Li, iShares investment
strategist at BlackRock.
"Speculative investors may have come in at these levels to try
to find the bottom."
Gold prices fell to a 5-1/2-year low in July, hurt by
expectations that the U.S. Federal Reserve would raise interest
rates for the first time in nearly a decade in September, Li
noted. "This was despite some safe-haven flows on Greece
headlines," she added.
Martin Arnold, FX and commodity strategist at ETF Securities, an
issuer of ETPs, said most of the outflows seemed to have come
from the United States, supporting the argument that a
strengthening dollar linked to decent economic data had helped
trigger a broader gold selloff.
Cyclical commodity ETPs also continued to suffer outflows, with
industrial metals ETPs losing $106 million and broad-basket
commodity ETPs losing $384 million.
Base metals sold off hard in July as investors took fright over
a slowing China, with copper, the bellwether metal for
industrial health, down almost 10 percent.
"The China-bashing just doesn't seem to stop," Arnold said. "We
saw a kneejerk reaction after the renminbi reforms - the
industrial metals declined sharply."
But he added that ETF Securities had started to see some bargain
hunting in copper and aluminum ETPs in early August.
(Reporting by Claire Milhench; Editing by Dale Hudson)
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