ProShares UltraShort Bloomberg Crude Oil (SCO) Climbs +33% as Oil Prices Collapse

Key Takeaways

• SCO surged approximately 33% over the past 30 days as crude oil prices collapsed, driven by the reopening of the Strait of Hormuz and a historic supply glut.
• The fund's -2x leveraged inverse structure amplifies daily moves in the opposite direction of the Bloomberg Commodity Balanced WTI Crude Oil Index, magnifying gains when oil prices fall.
• Brent crude tumbled from its April peak near $138 per barrel to roughly $71 in early July, while WTI fell from approximately $109 to around $68, creating a powerful tailwind for inverse oil positions.
• The US-Iran memorandum of understanding signed on June 17 accelerated the unwinding of the geopolitical risk premium, triggering the steepest monthly decline in oil since March 2020.
• OPEC+ production increases, record Russian shipments, and the release of more than 60 million barrels of previously trapped crude have swung the market from deficit to surplus.

ProShares UltraShort Bloomberg Crude Oil (SCO) Overview and Portfolio Exposure

SCO is a leveraged inverse exchange-traded fund (ETF) that seeks to deliver -2x the daily performance of the Bloomberg Commodity Balanced WTI Crude Oil Index. The fund is designed for short-term tactical positioning rather than buy-and-hold investing, using derivatives such as futures contracts and swaps to achieve its inverse exposure. Because it resets daily, compounding effects can cause returns over periods longer than one day to deviate from a simple -2x multiple of the index's return.

The ETF's portfolio is concentrated in crude oil futures and related derivative instruments, making it a pure play on the direction of West Texas Intermediate crude oil prices. With an expense ratio of approximately 0.95%, SCO is structured for sophisticated investors seeking to hedge commodity exposure or express a bearish view on oil. The fund carries significant volatility and is sensitive to daily price swings in the underlying commodity, which have been exceptionally large during the recent geopolitical turmoil in the Middle East.

SCO Price Performance: Last 30 Days vs. Quarter

Over the 30-day period ending in mid-July 2026, SCO climbed from approximately $25.23 to around $33.62, representing a gain of roughly 33%. The advance was not linear; the ETF experienced sharp rallies interspersed with brief pullbacks as oil prices whipsawed on shifting headlines around the Strait of Hormuz and US-Iran negotiations. The most pronounced leg higher occurred in the second half of June, coinciding with the signing of the US-Iran memorandum of understanding and the rapid recovery of crude flows through the strategic waterway.

Over the broader quarter, SCO has delivered substantial gains as crude oil prices collapsed from their wartime peaks. In early April, Brent crude traded near $138 per barrel and WTI approached $109, levels that likely placed SCO near multi-month lows. As the geopolitical risk premium evaporated and supply flooded back into the market, SCO rallied powerfully. From early May through mid-July, the ETF gained approximately 25%, with the bulk of those gains concentrated in June as the oil market's structure flipped from backwardation to contango, signaling a shift from scarcity to surplus.

What Drove SCO Price in the Last 30 Days

The primary catalyst for SCO's 33% surge was the dramatic collapse in crude oil prices triggered by the reopening of the Strait of Hormuz. On June 17, the United States and Iran signed a 14-point memorandum of understanding that ended military conflict and established a framework for reopening the strait, which handles roughly 20% of global oil supply. The agreement unleashed a flood of returning supply: UAE exports recovered to over 3.9 million barrels per day, Iranian oil exports jumped above 40 million barrels following the lifting of the American naval blockade, and total crude flows through the strait exceeded 10 million barrels per day.

Compounding the supply recovery, OPEC+ agreed to raise production targets by an additional 188,000 barrels per day from August, following similar hikes announced for June and July. Record Russian shipments added further pressure. On the demand side, Chinese crude imports remained depressed, running roughly 30% below year-earlier levels in May and falling further in June. The International Energy Agency (IEA) revised its 2026 demand forecast to a contraction of approximately 1 million barrels per day. The combination of surging supply and weak demand pushed Brent below $71 and WTI below $68, levels not seen since before the conflict began in late February. For SCO, which moves inversely to oil prices with 2x leverage, this environment proved exceptionally favorable.

What Drove SCO Performance Over the Last Quarter

SCO's quarterly performance reflects the broader unwinding of the geopolitical risk premium that had been embedded in crude oil prices since the Iran conflict erupted on February 28. During the second quarter, Brent crude recorded a decline of roughly 30%, its largest quarterly drop since 2020, while WTI fell more than 20%. The market transitioned from a deficit of approximately 2 million barrels per day during the height of the conflict to a projected surplus of about 1 million barrels per day by the fourth quarter of 2026.

Several structural forces reinforced the downtrend in oil. US shale production held near record levels of 13.6 million barrels per day. The US Strategic Petroleum Reserve continued releasing barrels even as the emergency faded. Global oil inventories held on water climbed by 117 million barrels in June alone. Meanwhile, JPMorgan and Macquarie both slashed their oil price forecasts, with Macquarie cutting its 2026 Brent average estimate from $89 to $77 per barrel. The persistent decline in crude prices, punctuated by brief spikes on renewed military clashes, provided a sustained tailwind for SCO throughout the quarter.

Using Tickeron’s AI Screener for ETF Research

Identifying ETFs with strong momentum like SCO often benefits from systematic screening tools. I also checked this using Tickeron’s AI Screener to compare the fund against other inverse commodity vehicles and momentum candidates in the sector. The platform allows filtering by technical indicators, volatility metrics, and performance patterns, which can help surface ideas more efficiently when markets are moving quickly. In my view, incorporating such a tool into the research process provides an additional layer of perspective alongside traditional analysis, particularly for leveraged products that require close monitoring of daily resets and compounding effects.

SCO ETF Outlook: What Investors Should Watch Next

The trajectory of SCO in the coming months will depend heavily on whether the current oil supply glut persists or tightens. The most critical variable is the durability of the US-Iran ceasefire and the pace of further normalization through the Strait of Hormuz. While crude flows have recovered significantly, they remain roughly 40% below pre-war levels, and renewed military exchanges in early July demonstrated the fragility of the situation. Any breakdown in negotiations could send oil prices sharply higher, creating headwinds for SCO.

Chinese demand represents another pivotal factor. Chinese crude imports have been running well below normal levels, and a meaningful return of Chinese buying could absorb some of the excess supply, potentially stabilizing or lifting oil prices. Conversely, if Chinese demand remains subdued and OPEC+ continues adding barrels, the surplus could deepen, providing further support for inverse oil positions. Investors should also monitor US inventory data, which has shown twelve consecutive weeks of drawdowns, leaving domestic stockpiles at multi-year lows. The need to rebuild inventories could provide a floor under oil prices. Additionally, the Federal Reserve's monetary policy path and its impact on the US dollar will influence dollar-denominated commodity prices. As a leveraged inverse product, SCO is best suited for short-term tactical use, and investors should remain attentive to the compounding effects and volatility decay inherent in daily-reset leveraged funds.

Disclaimers and Limitations

Contributor

Jimmy Landsman|Expert

My name is Jimmy, and I’m a financial analyst focused on identifying compelling opportunities across the ETF market. Each day, I analyze hundreds of ETFs to uncover potential trading and investment opportunities using a broad range of market factors. For short-term trading, I rely heavily on technical analysis, including price channels, momentum indicators, support and resistance levels, trend patterns, and other market signals. At the same time, I dedicate significant attention to evaluating ETFs from a long-term investment perspective. My objective is to build a well-balanced ETF portfolio that combines core investment holdings with more tactical and speculative positions. The goal is to create a portfolio that can participate effectively in market rallies while also remaining resilient during periods of volatility and market corrections.

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