Editor's note: Any and all references to time frames longer than one trading day are for purposes of market context only, and not recommendations of any holding time frame. Daily rebalancing ETFs are not meant to be held unmonitored for long periods. If you don't have the resources, time or inclination to constantly monitor and manage your positions, leveraged and inverse ETFs are not for you.

Oil and gas exploration and production stocks have been on a rollercoaster ride over the past few weeks, marked by significant price swings in the commodity and heightened market uncertainty. This volatility* is influenced by a complex mix of geopolitical developments, policy shifts, and market dynamics.​

WTI crude oil prices have hit a four-year low on recession fears, falling to around $60 a barrel after topping out around $80 earlier this year, according to Mint.com. One key driver behind the pullback is the ongoing U.S.-China trade tensions, with new tariffs announced on a near-daily basis, raising concerns about global economic growth.

Below is a daily chart of the S&P Oil & Gas Exploration & Production Select Industry Index* as of April 11, 2025.

Source: TradingView.com

Candlestick charts display the high and low (the stick) and the open and close price (the body) of a security for a specific period. If the body is filled, it means the close was lower than the open. If the body is empty, it means the close was higher than the open.

The performance data quoted represents past performance. Past performance does not guarantee future results.

The oil and gas sector’s volatility is nothing new, but 2025 has turned up the heat. Geopolitical developments, policy shifts, and market dynamics are colliding to create a perfect storm.

For traders looking to capitalize on these rapid movements, leveraged ETFs offer tools to potentially benefit from short-term price directions. Given their leveraged nature, these ETFs are designed for short-term trading and require careful monitoring.​

Bullish Catalysts: GUSHing Over Potential Gains

Let’s break down the bullish case for oil and gas stocks first:

• Policy Incentives for Domestic Production: Recent discussions around boosting U.S. energy independence have led to policy proposals aimed at incentivizing domestic oil and gas production. Such measures could support exploration and drilling activities, benefiting companies within the sector.​

• OPEC Production Decisions: OPEC’s unexpected supply increases have added complexity to the market. While increased output can suppress prices, any reversal or curtailment could provide upward pressure on oil prices, favoring bullish positions.

• Deepwater Exploration Advances: Technological advancements and new discoveries in deep water drilling are opening up previously inaccessible reserves. Companies investing in these areas may see growth opportunities, potentially driving sector performance.​

Bearish Catalysts: DRIPping with Caution

But don’t get too cozy—the bearish case is just as compelling. Bearish catalysts include:

• Falling Oil Prices Amid Trade Conflicts: The imposition of tariffs and ongoing trade tensions have led to concerns about global economic growth, contributing to a decline in oil prices. Lower prices can impact the profitability of exploration and production companies. ​

• Tariff Impacts on the Energy Sector: Tariffs on imported steel and other materials essential for drilling operations have increased costs for U.S. oil producers. This financial strain could lead to reduced investment in new projects. ​

• Geopolitical Tensions and Market Stability: Global geopolitical events, such as conflicts and policy shifts, continue to introduce uncertainty into the energy markets. This unpredictability can lead to rapid price fluctuations, challenging for both producers and investors.​

For traders looking to play upside in the sector, Direxion Daily S&P Oil & Gas Exp. & Prod. Bull 2X Shares (Ticker: GUSH) seeks daily investment results, before fees and expenses, of 200% of the performance of the S&P Oil & Gas Exploration & Production Select Industry Index. Conversely, Direxion Daily S&P Oil & Gas Exp. & Prod. Bear 2X Shares (Ticker: DRIP), seeks 200% of the inverse (or opposite) of the performance of the S&P Oil & Gas Exploration & Production Select Industry Index.

Bullish themes like policy incentives, OPEC restraint, and deepwater expansion could send the sector soaring—making GUSH a tempting pick for the optimists. But with trade tensions, tariff-related cost pressures, and geopolitical risks still in play, DRIP might appeal more to the cautious.

The oil and gas sector’s current volatility presents both opportunities and risks. Leveraged ETFs like GUSH and DRIP may be effective tools for traders aiming to navigate these short-term market swings. However, due to their leveraged nature, they are best suited for those with a high-risk tolerance and a keen eye on market developments.

*Definitions and Index Descriptions

An investor should carefully consider a Fund’s investment objective, risks, charges, and expenses before investing. A Fund’s prospectus and summary prospectus contain this and other information about the Direxion Shares. To obtain a Fund’s prospectus and summary prospectus call 866-476-7523 or visit our website at direxion.com. A Fund’s prospectus and summary prospectus should be read carefully before investing.

Leveraged and Inverse ETFs pursue daily leveraged investment objectives which means they are riskier than alternatives which do not use leverage. They seek daily goals and should not be expected to track the underlying index over periods longer than one day. They are not suitable for all investors and should be utilized only by sophisticated investors who understand leverage risk and who actively manage their investments.

The S&P Oil & Gas Exploration & Production Select Industry Index (SPSIOPTR) is provided by Standard & Poor’s Index Provider and includes domestic companies from the oil and gas exploration and production sub-industry. The Index is a modified equal-weighted index that is designed to measure the performance of a sub-industry or group of sub-industries determined based on the Global Industry Classification Standards (GICS). One cannot invest directly in an index.

The “S&P Oil & Gas Exploration & Production Select Industry Index” is a product of S&P Dow Jones Indices LLC (“SPDJI”), and has been licensed for use by Rafferty Asset Management, LLC (“Rafferty”). Standard & Poor’s^® and S&P^® are registered trademarks of Standard & Poor’s Financial Services LLC (“S&P”); Dow Jones^® is a registered trademark of Dow Jones Trademark Holdings LLC (“Dow Jones”); and these trademarks have been licensed for use by SPDJI and sublicensed for certain purposes by Rafferty. Rafferty’s ETFs are not sponsored, endorsed, sold or promoted by SPDJI, Dow Jones, S&P, their respective affiliates and none of such parties make any representation regarding the advisability of investing in such product(s) nor do they have any liability for any errors, omissions, or interruptions of the S&P Oil & Gas Exploration & Production Select Industry Index.

Direxion Shares Risks – An investment in a Fund involves risk, including the possible loss of principal. A Fund is non-diversified and includes risks associated with the Fund’s concentrating its investments in a particular industry, sector, or geography which can increase volatility. The use of derivatives such as futures contracts and swaps are subject to market risks that may cause prices to fluctuate over time.

Leverage Risk – Each Fund obtains investment exposure in excess of its net assets by utilizing leverage and may lose more money in market conditions that are adverse to its investment objective than a fund that does not utilize leverage. A total loss may occur in a single day. Leverage will also have the effect of magnifying any differences in the Fund’s correlation or inverse correlation with the Index and may increase the volatility of the Fund.

Daily Index Correlation Risk – A number of factors may affect the Bull Fund’s ability to achieve a high degree of correlation with the Index and therefore achieve its daily leveraged investment objective. The Bull Fund’s exposure to the Index is impacted by the Index’s movement. Because of this, it is unlikely that the Bull Fund will be perfectly exposed to the Index at the end of each day. The possibility of the Bull Fund being materially over- or under-exposed to the Index increases on days when the Index is volatile near the close of the trading day.

Daily Inverse Index Correlation Risk – A number of factors may affect the Bear Fund’s ability to achieve a high degree of inverse correlation with the Index and therefore achieve its daily inverse leveraged investment objective. The Bear Fund’s exposure to the Index is impacted by the Index’s movement. Because of this, it is unlikely that the Bear Fund will be perfectly exposed to the Index at the end of each day. The possibility of the Bear Fund being materially over- or under-exposed to the Index increases on days when the Index is volatile near the close of the trading day.

Oil and Gas Industry Risk – Companies in the oil and gas industries are affected by supply and demand both for their specific product or services and for energy products in general.

Energy Sector Risk – Energy sector securities may be adversely impacted by changes in the levels and volatility of global energy prices, global supply and demand, and capital expenditures on the exploration and production of energy sources.

Additional risks of each Fund include Effects of Compounding and Market Volatility Risk, Market Risk, Counterparty Risk, Rebalancing Risk, Intra-Day Investment Risk, Other Investment Companies (including ETFs Risk), Cash Transaction Risk, Passive Investment and Index Performance Risk and for the Direxion Daily S&P Oil & Gas Exp. & Prod. Bear 2X Shares, Shorting or Inverse Risk. Please see the summary and full prospectuses for a more complete description of these and other risks of a Fund.

ALPS Distributors, Inc.