Oil ETN To Close

April 22, 2020

The iPath Series B S&P GSCI Crude Oil ETN (OIL) is currently in the last stages of its existence. With oil prices plunging into negative territory on Monday, April 20, it halted creations and is scheduled to be called on April 30.

In an announcement, Barclays noted that it was exercising its issuer call option, which allows the issuer to call the ETN at its discretion. However, the same press release also mentions that the ETN’s closing trading price on April 20 was $3.73 per share and that the price represented a 13.5% premium relative to the ETN’s closing indicative value. 

OIL’s share price was down roughly 70% year-to-date as of Monday. Between that; the fact that it was trading below $5 per share, which can trigger automatic delisting; and its widening premium, Barclays may have simply decided the ETN was not worth supporting further.

Interestingly, the ETN has seen nearly $300 million in inflows so far this month. However, that was not enough to keep it afloat. With oil in a fairly steep decline since the start of the year, investors had been betting on an upturn.

The ETN originally launched in November 2016 under the ticker OILB. It was intended as an improved version of an existing ETN that traded under the ticker and also tracked the S&P GSCI Crude Oil Index. OILB adopted the “OIL” ticker after the original ETN was closed in 2018.

Closures are currently hovering at an unprecedented 100 ETF shutdowns for 2020. Many of the closures that have occurred since the stock market crash have been in commodities-related products.

Contact Heather Bell at [email protected]

 

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