Been digging into the energy sector lately and there's something worth paying attention to here. The energy market got hit pretty hard last month, and if you're bearish on oil right now, there are actually some interesting ways to play it through ETFs.

So here's what happened: XLE, the big energy sector fund, lost over $600 million in assets and dropped 5.5% in May while the broader market barely moved. At the same time, Brent crude fell 3.2%, though U.S. crude was actually up slightly. On the surface it looks like a typical pullback, but the underlying dynamics are pretty bearish when you dig deeper.

The supply side is the real story. U.S. oil production hit a 43-year high despite rig counts dropping for 25 straight weeks. OPEC is pumping at levels we haven't seen in over two years, Saudi Arabia is at 30-year production highs, and non-OPEC producers like Russia and Brazil are ramping up too. Meanwhile, crude stockpiles are at 80-year highs. The IEA basically confirmed this glut will stick around for at least two more years. On the demand side, growth is only expected at 1.1 million barrels a day. The math doesn't add up in oil's favor.

What's interesting is that even USO, the massive oil tracking fund with $3 billion in assets, pulled out $1 billion in just two months. That kind of outflow tells you something about investor sentiment.

If you think oil stays weak or drops below $50, shorting the energy sector becomes an attractive play. The good news is there are several ways to do this through ETFs now, which makes it pretty accessible.

First, there's DDG from ProShares. It gives you unleveraged inverse exposure to oil and gas stocks, so you profit when energy stocks fall. It's lighter on volatility but the volume and assets are pretty minimal. Then you've got DUG, which is the 2x leveraged version of the same index. That one has decent volume and pulled in 10.7% over the month we're looking at.

If you want more aggressive short energy positioning, ERY is the play. It's a 3x inverse ETF tracking the energy sector directly, and it's actually pretty popular with solid trading volume. That one gained 17.1% in May alone. There's also MLPS if you want to short the master limited partnerships side of energy, though that one's lighter on assets and volume.

The real caveat here is that these are daily rebalanced products, so they're really only meant for short-term traders. Hold them too long and decay eats into your returns. But if you're looking for a tactical short energy etf position over the next few weeks or months, any of these could work depending on your risk tolerance and how bearish you are on the sector.

The trend looks pretty clear right now: oversupply, weak demand growth, and outflows from the big funds. If that story continues to play out, a short energy etf strategy could be worth considering for traders with conviction on lower oil prices.