Just as investors thought energy prices had started to gain traction, crude oil for September delivery (CL=F) plunged 3% Wednesday over fresh demand concerns caused by disappointing economic data from China and Europe, coupled with an unexpected uptick in U.S. stockpiles for the second consecutive week.

Chinse industrial production figures for July revealed an unexpected stall in growth, highlighting the mounting cost from the intensifying trade dispute with the United States. To compound global slowdown concerns, Eurozone gross domestic product (GDP) grew just 0.2% in the second quarter amid Brexit uncertainty. "The data out of China, the potential recession brewing in Germany, all of that is playing into global demand worries," Phil Flynn, an analyst at Price Futures Group, told CNBC.

Speaking of recessions, the yield on 10-year U.S. government bonds briefly slipped below 2-year yields Wednesday morning, in what traders refer to as "inversion of the yield curve." The signal typically predicts economic contractions.

On the inventories front, U.S. crude stocks grew by 1.58 million barrels for the week ending Aug. 9, versus expectations of a 2.78-million-barrel drawdown. The Energy Information Administration (EIA) cited slashed refinery production for the surprise build.

Traders who want to bet against the "risk-on" energy sector should explore these three inverse exchange-traded funds (ETFs) that rise in price as large-cap oil and gas stocks fall. Let's go over the metrics of each fund and discuss several tactical plays.

Direxion Daily Energy Bear 3X Shares (ERY)

Created at the height of the Great Recession in 2008, the Direxion Daily Energy Bear 3X Shares (ERY) seeks to return three times the inverse daily performance of the Energy Select Sector Index. The benchmark comprises U.S. large-cap energy companies, with industry heavyweights Exxon Mobil Corporation (XOM) and Chevron Corporation (CVX) carrying a cumulative weighting of over 40%. Average dollar volume liquidity of roughly $7 million, combined with a 0.10% spread, make the fund ideal for traders who want an aggressive short-term bet against industry blue chips. ERY holds $22.32 million in net assets, charges a 1.09% management fee, offers a 1.50% dividend yield, and has returned 32.43% in the past month as of Aug. 15, 2019.

ERY shares trended steadily lower between January and April before staging a rally in May. The ETF gave back gains in June, spent July tracking sideways, and has started to climb higher in August. The price surged above two recent peaks in Wednesday trade, which may act as a catalyst for additional buying. Those who enter here should consider setting a take-profit order near the December 2018 swing high at $81.43 and place stops beneath the Aug. 13 low at $50.66.

Chart depicting the share price of Direxion Daily Energy Bear 3X Shares (ERY)

ProShares UltraShort Oil & Gas (DUG)

With assets under management (AUM) of $16.8 million, ProShares UltraShort Oil & Gas (DUG) aims to provide investment results that correspond to two times the inverse daily return of the Dow Jones U.S. Oil & Gas Index. Exxon Mobil and Chevron make up a sizeable portion of the underlying index here also, with respective allocations of 42.11% and 17.63%. Average daily share turnover of about 46,000 units paired with a spread of just 0.08% makes the fund easy to enter and exit, while minimizing slippage. Traders should be aware that long-term returns may deviate from the stated leverage as the fund rebalances daily, making it subject to the effects of compounding. As of Aug. 15, 2019, DUG issues a 0.60% dividend yield and has jumped nearly 23% in the past month.

Since breaking above a four-month downtrend line in late April, the fund's price has forged two legs higher – in May and August. Yesterday's convincing breakout above both the May swing high and Aug. 7 high indicates underlying bullish momentum. Traders should look for a test of the Dec. 26, 2018, high at $58.40, which offers 19% potential upside from Wednesday's $49.26 closing price. Protect trading capital by placing a stop-loss order between $44 and $46.

Chart depicting the share price of ProShares UltraShort Oil & Gas (DUG)

Direxion Daily S&P Oil & Gas Exp. & Prod. Bear 3X Shares (DRIP)

The Direxion Daily S&P Oil & Gas Exp. & Prod. Bear 3X Shares (DRIP) has a mission to return three times the inverse daily performance of the S&P Oil & Gas Exploration & Production Select Industry Index. As its name suggests, the benchmark consists of large oil and gas exploration and production companies. The fund, which launched in 2015, achieves its leveraged exposure by investing in swaps, futures contracts, and short positions. As a result of using derivative products, the ETF charges a higher management fee of 1.07%. Traders should consider placing limit orders, rather than market orders, to combat the fund's slightly wider but manageable 0.26% spread. DRIP controls $18.57 million in assets, yields 0.77%, and has barreled 65.60% higher over the past month as of Aug. 15, 2019.

DRIP shares started their current move higher in April and now trade just 11% below the fund's 12-month high set in the fourth quarter of 2018. Wednesday's 15.26% rally to a fresh YTD high may attract further buying interest as traders look for alternative ways to play slumping oil prices. Those who decide to trade the ETF should think about using a 10-day simple moving average as a trailing stop to let profits run as far as possible. Keep an initial stop underneath yesterday's low at $109.32 to guard against a sudden stall of momentum.

Chart depicting the share price of the Direxion Daily S&P Oil & Gas Exp. & Prod. Bear 3X Shares (DRIP)