US Commodity Funds May Launch Argus Oil ETF

By Christine Buurma Of DOW JONES NEWSWIRES NEW YORK -(Dow Jones)- The company that manages the world's largest exchange-traded fund for oil may launch an ETF tied to the Argus sour crude index. "Absolutely, if that's what people find useful," John Hyland, chief investment officer for United States Commodity Funds, told Dow Jones Newswires on the sidelines of a conference in New York. Hyland's firm manages the United States Oil Fund (USO) and the United States Natural Gas Fund (UNG). Each is the largest single-commodity ETF in its market. London-based Argus Media got a major boost for its index when it announced last week that Saudi Aramco, the state oil company of Saudi Arabia, the world's biggest oil exporter, would begin using the benchmark to price oil sold in the U.S. Many oil market participants believe other major exporters could soon follow. Both CME Group Inc. (CME), which owns Nymex, and competitor IntercontinentalExchange Inc. (ICE) have said they will launch derivatives tied to the Argus index. While Saudi Aramco's customers are likely candidates to use Argus futures to reduce exposure to fluctuating prices, it's not clear how much trading activity the new contract can draw away from better-established oil futures. However, United States Commodity Funds would only introduce an Argus fund if a New York Mercantile Exchange contract tied to the index attracts traders' interest, Hyland said. He said United States Commodity Funds would also consider launching a fund that would allow investors to "short" natural gas, or bet that the price of gas will fall. Such a fund launch would be contingent on the firm's recently introduced short oil fund winning investors' interest, Hyland said. The U.S. Short Oil Fund (DNO) has $13.5 million in assets, compared with $1.9 billion in USO and $3.9 billion in UNG. -By Christine Buurma, Dow Jones Newswires; 212-416-2453; brian.baskin@dowjones.com (Brian Baskin in New York contributed to this article)