For example, if it holds WTI crude oil futures contracts that expire in September 2020, it must roll over its contracts and purchase those that expire in October 2020. Although the fund invests its assets primarily in exchange-listed crude oil futures contracts and oil-related futures contracts, such as natural gas futures contracts, the fund may also invest in swap and forward contracts. Crude oil and natural gas are among commodities that have historically experienced long periods of contango. Therefore, the United States Oil Fund suffers from negative roll yields when purchasing further dated WTI futures contracts as the front-month futures contract expires. Over the long term, the negative roll yields add up, causing United States Oil Fund investors to experience losses. Therefore, investors planning to gain exposure to the oil market over the long term should avoid investments in the United States Oil Fund.

• Government regulation and taxation Investments held in U.S. government securities and money market instruments can suffer losses.
• View charts that break down the influence that fund flows and price had on overall assets.
• Investment return and value of the Fund shares will fluctuate so that an investor’s shares, when sold, may be worth more or less than their original cost.
• These investments will be collateralized by cash, cash equivalents, and US government obligations with remaining maturities of two years or less.

Contrary to contango, backwardation occurs when the price of a futures contract of an underlying asset is below its expected future spot price. Consequently, backwardation causes investors to profit when rolling expiring futures contracts to futures contracts expiring at a later month. The Fund seeks to reflect the performance of the spot price of West Texas Intermediate light, sweet crude oil delivered to Cushing, Oklahoma by investing in a mix of Oil Futures Contracts and Other Oil Interests. The United States Brent Oil Fund® LP (BNO) is an exchange-traded security designed to track the daily price movements of Brent crude oil. BNO issues shares that may be purchased and sold on the NYSE Arca.

While oil may be appealing, USO often suffers from severe contango making the product more appropriate for short-term traders. Click the link below and we’ll send you MarketBeat’s guide to investing in electric vehicle technologies (EV) and which EV stocks show the most promise. ALPS Distributors, Inc., is the distributor for funds sponsored by the broker de forex hugo fx United States Commodity Funds LLC and funds that are series of the USCF ETF Trust and not affiliated with either entity or USCF Investments, Inc. USCF is a registered service mark of United States Commodity Funds LLC. United States Commodity Funds LLC and USCF Advisers LLC are wholly owned limited liability companies of USCF Investments, Inc.

USO tends to track the price of oil pretty well, and its performance over the trailing 1-, 5-, and 10-year periods is 20.34%, -12.18%, and -19.8%, respectively. Though the news of continuation of China’s zero-Covid policy cast a pall over oil prices on Monday, it is likely to be a short-term drag. Scott Burns, director of ETF research for Morningstar, says that the financial-services sector may have “a lot of value right now, but it’s also got a lot of risk and volatility,” and he cautioned average investors to stay… Scott Burns, director of ETF research for Morningstar, says that the financial-services sector may have “a lot of value right now, but it’s also got a lot of risk and volatility,” and he cautioned average investors to stay… Daring to drink the water of the emerging markets funds could prove to be little more than a way to tap into Montezuma’s revenge. But history tells us that investors who discount the rewards are as prone to disappointment …

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United States Oil Overview

United States Oil Fund’s stock was trading at $70.11 at the start of the year. Since then, USO shares have increased by 12.7% and is now trading at $78.99. USCI, USO, USL, BNO, UNG, UNL, UGA, and CPER are commodity pools regulated by the Commodity Futures Trading Commission. These Funds, which are ETPs, are not mutual funds or any other type of Investment Company within the meaning of the Investment Company Act of 1940, as amended, and are not subject to regulation thereunder. By using this site, you are agreeing to security monitoring and auditing. For security purposes, and to ensure that the public service remains available to users, this government computer system employs programs to monitor network traffic to identify unauthorized attempts to upload or change information or to otherwise cause damage, including attempts to deny service to users.

• Oil prices have soared to their highest levels in many years due to geopolitical tensions in Europe and the Middle East.
• United States Commodity Funds LLC and USCF Advisers LLC are wholly owned limited liability companies of USCF Investments, Inc.
• United States Oil Fund’s stock was trading at $70.11 at the start of the year.
• Oil prices increased considerably on Sep 5 as OPEC+ producers agreed a small oil output cut.

The firms are uniquely positioned to aid advisor’s education, adoption, and usage of ETFs, as well as the asset management community’s transition from traditionally analog to digital interactions with the advisor community. © 2023 Market data provided is at least 10-minutes delayed and hosted by Barchart Solutions. Information is provided ‘as-is’ and solely for informational purposes, not for trading purposes or advice, and is delayed.

This chart shows how a hypothetical investment of $10,000 in the Fund at its inception would have performed versus an investment in the Fund’s benchmark futures contract(s). The values indicate what $10,000 would have grown to over the time period indicated. The hypothetical example does not represent the returns of any particular investment. The United States Oil Fund has underperformed the spot price of WTI crude oil and has not correctly measured its daily performance over the past five years.

Dataset Information

Government regulation and taxation Investments held in U.S. government securities and money market instruments can suffer losses. As of June 2021, the price of oil has started to increase and is trading around $76 a barrel. This is after a steep decline amidst the global coronavirus epidemic, when the price was trading at around $19 a barrel in May 2020.

Major exchange-traded funds pegged to moves in crude oil are on track for their biggest weekly gain in more than a year, boosted as OPEC unexpectedly reached a deal to cut production – a move that could address the commodi… Shares of United States Oil Fund reverse split before market open on Wednesday, forex broker rating April 29th 2020. The 1-8 reverse split was announced on Wednesday, April 22nd 2020. The number of shares owned by shareholders was adjusted after the closing bell on Tuesday, April 28th 2020. An investor that had 100 shares of stock prior to the reverse split would have 13 shares after the split.

USO Price vs Flows AUM Influence Charts

Investment return and value of the Fund shares will fluctuate so that an investor’s shares, when sold, may be worth more or less than their original cost. The parameters for USO’s investment discretion are set forth and discussed in detail in USO’s prospectus. USO can change such parameters if regulatory requirements, market conditions, liquidity requirements or other factors make it necessary for USO to do so. USO’s portfolio holdings, as well as its investment intentions with respect to the type and percentage of investments in USO’s portfolio, are disclosed daily on the portfolio holdings page of the website. Investors seeking to tap the oil rally could bet on the ETFs that are directly linked to the futures contracts.

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USO management then announced a 1-8 reverse share split for USO to go into effect after the market close on April 28, 2020. A reverse split reduces the number of shares outstanding into fewer and proportionally higher-priced shares. Such action is often interpreted by analysts and investors that the stock, or exchange-traded product, is having trouble holding its perceived value. BNO invests primarily in listed crude oil futures contracts and other oil-related futures contracts, and may invest in forwards and swap contracts. These investments will be collateralized by cash, cash equivalents, and US government obligations with remaining maturities of two years or less.

Investment in small companies generally experience greater price volatility. Contango occurs when the price of a futures contract on an underlying asset is above its expected scalping: an introduction future spot price. Since the front-month futures contracts are cheaper than those expiring further out in time, the futures curve is said to be upward-sloping.

USO ETF – Frequently Asked Questions

Recent and unprecedented volatility in the crude oil markets in 2020 demonstrates that these risks are real. An investor should consider carefully the risks described below before making an investment decision. See the section of the USO prospectus titled “Risk Factors Involved with an Investment in USO.” Certain of these risk factors are summarized in the Disclosures section of this website.

The amount of the discount or premium in the trading price of USO relative to USO’s NAV per share may be influenced by various factors including, among other things, the number of investors who seek to purchase or sell shares in the secondary market and the liquidity of the oil futures. As an example, in April 21, 2020, the price per USO share sold in the secondary market was 36% higher than the end of day per share NAV of USO. This discrepancy was attributable to increased demand for USO shares due to market forces and USO’s having temporarily halted the sale of Creation Baskets. The Fund seeks to have the changes in percentage terms of the units’ net asset value reflect the changes in percentage terms of the price of light, sweet crude oil delivered to Cushing, Oklahoma, as measured by the changes in the average of the prices of 12 Futures Contracts. BNO’s Benchmark is the near month futures contract traded on the ICE Futures Exchange. If the near month futures contract is within two weeks of expiration, the Benchmark will be the next month contract to expire.

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