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Comments (3)

Lakestone profile picture
Regarding the USO's disconnection from the spot price, what are your thoughts on BNO? I know it's made for brent however it seems to correlate much stronger with the crude oil spot price than USO.
SilentRage profile picture
Buying and holding crude, if you are not in the storage or physical market, is akin to buying and holding Bitcoin or Tesla. Be prepared for weekly 20%, 30%, sometimes 50% weekly fluctuations in your investment. Like Bitcoin and Tesla, Crude oil, given its cloudy outlook and future, is a terrific asset to trade, but a horrible long term investment because of its sky high short-term and long-term volatility.
This is a good article but you should have gotten more in depth or precise about what contracts USO is holding. If I hadn't known myself and I came across your article it would appear that this just tracks the front month contract. Your explanation of why the price of the ETF can deviate from spot is simple to understand and is correct which is great but more detail is needed to explain that the fund is no longer hold just the front month or second month contract. The fund is now holding contracts all the way out until June 2021 which is an entirely different investment vehicle from what the average person on twitter realizes.
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