Been looking back at how oil markets moved during the 2016-2017 OPEC production cut negotiations, and there's actually a lot worth revisiting about how to position for commodity plays using leveraged etf strategies.

So here's what happened back then. OPEC and non-OPEC producers including Russia made their first major output deal since 2001, cutting production by roughly 1.7 million barrels daily. Saudi Arabia signaled even deeper cuts than initially expected. Non-OPEC countries committed to reducing output by 558,000 bpd. The agreement targeted bringing total OPEC production down to about 32.5 million barrels per day for six months. WTI and Brent crude futures both jumped over 5% following the announcement.

The math behind it was interesting. Analysts at Bernstein estimated that with reasonable compliance, these cuts would push the market into deficit territory. They projected 0.8 million barrels per day deficit in the first half of 2017, potentially growing to over 1.5 million bpd if tightening continued. Global demand was running around 96.3 million barrels daily with expectations for another 1.2 million bpd growth in 2017. Price targets at the time suggested $60/bbl for Brent crude was achievable in the near term, especially with prices hovering around $55/bbl.

Now, the complication. U.S. shale production tends to respond quickly to price increases. If crude stayed elevated, American producers would boost output, potentially flooding the market again. The U.S. rig count was already climbing at that point.

For investors interested in leveraged etf exposure to oil, there were several routes. On the regular side, United States Oil (USO) tracking WTI crude and United States Brent Oil (BNO) offered straightforward plays. But leveraged options provided amplified exposure.

ProShares Ultra Bloomberg Crude Oil (UCO) delivered twice the daily return of WTI crude futures. If you wanted even more leverage, Direxion Daily S&P Oil & Gas Exploration & Production Bull 3X (GUSH) offered three times exposure to E&P companies. Direxion Daily Energy Bull 3X (ERX) gave triple leverage to the broader energy sector. ProShares Ultra Oil & Gas (DIG) provided two times daily performance of the Dow Jones Oil & Gas Index.

For broader energy plays, PowerShares S&P SmallCap Energy (PSCE) tracked smaller energy firms, while PowerShares DWA Energy Momentum (PXI) focused on companies showing relative strength.

The takeaway from that period was straightforward. If you believed OPEC and non-OPEC producers would actually follow through on their pledges, leveraged etf positions in oil and energy offered potential gains, particularly on shorter timeframes. The supply tightening story was compelling, though always with the caveat that higher prices invite U.S. shale back into production.

Obviously this was all historical context from 2016-2017, but it's a useful case study in how commodity leverage works and why leveraged etf instruments can amplify both opportunities and risks in energy markets. The mechanics haven't changed much even though market conditions clearly have.