The fund gets the money to invest in futures by issuing shares to a list of predetermined customers in blocks, usually multiples of 100,000. With states starting to reopen, the supply/demand imbalance will slowly start to work itself out but that could take months, if not years. Ever since the price of oil and oil funds collapsed in April, I've received a bunch of questions asking where prices go from here. That changed when the May contract went to $0. Tech ETFs can be a great addition to your portfolio. If it doesn’t move then it seems like this stock is useless and doesn’t have much upside, I think USO would need a juicy reverse split to get to $100 :). The coronavirus has ground the U.S. and global economies to a halt and we still have no idea when things are going to come fully back online. I've written extensively on the United States Oil Fund (USO) and the ProShares Ultra Bloomberg Crude Oil Fund (UCO) lately, so questions were related specifically to those products. It is important to remember that USO isn't an actively managed fund. Should You Buy Or Sell The Oil ETF, USO? I just invested in UCO at $12 per share. Report. USO started the year at a split-adjusted $100. [])). In this case, that would equate to roughly $60/barrel. United States Oil Fund (NYSEMKT:USO) purchases light, sweet, crude oil futures on behalf of its investors and passively manages itself according to its prospectus. These big swings could benefit you if and when the value of oil rises from its current lows, making this a perfect product forinvestors who believe that crude oil prices will rise in the future. That's a big reason why oil last month fell to -$40 barrel. In other words, USO is no longer a play on oil prices. Glad to chat your blog, I seem to be forward to more reliable articles and I think we all wish to thank so many good articles, blog to share with us. I have since left the industry to study finance and economics seemingly in perpetuity. If you liked this article/video, please click the LIKE button or share it on Twitter, Facebook, etc. Lots of crude production but no place to put it. Market data powered by FactSet and Web Financial Group. Oil was up 10% but USO dropped 7%. Definitely not. More time trading throughout the day gives investors a better picture of the market value of an asset -- an advantage called price discovery. I also share useful information about remove any unwanted object from photos and videos with the help of watermark remover online tools at, If you have some pictures with watermarks and you want to remove the watermarks, you can use this free tool for Windows called F, UCO just announced there changing there exposure to 1/3 to December futures and 2/3 September, last week it was 100% September. Even simple trips to work have been minimized since so many people are working from home now. USO aims to reflect the daily changes, in percentage terms, of the spot price of light, sweet crude oil delivered to Cushing, Oklahoma. Many consumers are hoarding what cash they have and spending only on essentials. Is that a recipe for oil prices to go from $10/barrel back to $60? I’m a newbie in shares & stocks. Some investors might be tempted to buy this ETF now, thinking that oil prices will rebound, but they should understand the risks involved before doing so.. Manufacturing and services activity have plummeted to all-time lows. See you at the top! USO used to invest solely in near-term oil contracts with expirations of around one month or less. Then, it dumped the one-month contracts altogether. This process is automatic. That's pretty much a best case scenario where the economic reopening works well, consumers begin returning en masse to shopping centers and resume traveling, there's no new spike in coronavirus cases and OPEC countries agree not to overproduce again. Oil funds aren't like regular ETFs or mutual funds where you simply buy and hold stocks, bonds or whatever. To investors, this means that their shares of the ETF rose more in value than they paid out to it in fees. Producers were PAYING people to take it off their hands. Your browser will redirect to your requested content shortly. Find the latest quotes for United States Oil Fund (USO) as well as ETF details, charts and news at Here are 5 of your best options for technology ETFs right now. Follow me and receive periodic notifications when I post here by clicking the FOLLOW button at the top of the page! I found a site which offers you many readable articles. Join for free by clicking HERE. Whammo presto, the holders of USO lost 13.4% of their exposure to crude oil. Cumulative Growth of a $10,000 Investment in Stock Advisor, USO Hasn’t Traded This Low, Ever @themotleyfool #stocks $USO, The U.S. Oil Fund Is Put on Notice by the SEC, Ditch These 3 Popular Oil ETFs and Consider Buying This 1 Instead, 1 Risk That Oil ETF Investors Need to Watch Closely, Still Own USO? The loss owed to a decline in the value of the futures it already held, to the tune of $225 million. Stock Advisor launched in February of 2002. +((!+[]+(!![])+!![]+!![]+!![]+!![]+!![]+!![]+[])+(+!![])+(!+[]+(!![])+!![]+!![]+!![]+!![]+!![])+(!+[]+(!![])+!![]+!![]+!![])+(!+[]-(!![]))+(!+[]+(!![])+!![]+!![])+(!+[]+(!![])-[])+(!+[]+(!![])+!![]+!![])+(!+[]+(!![])+!![]))/+((!+[]+(!![])-[]+[])+(+!![])+(!+[]+(!![])+!![])+(!+[]+(!![])+!![]+!![]+!![]+!![])+(+!![])+(!+[]+(!![])+!![]+!![]+!![]+!![])+(+!![])+(!+[]+(!![])+!![]+!![]+!![])+(+!! Based on those $1.46 billion in net assets, the ETF reported a $205 million loss at the end of February. USO is an Exchange Traded Fund, meaning it operates like a mutual fund (it takes your money and invests it in products that align with its prospectus) but trades on an exchange. The fund stated on Feb. 29, 2020 that the value of the assets it held were $1.46 billion, while the fund had 156 million shares outstanding, giving the fund a net asset value per share of $9.36 as of the date of the statement. After piling into oil futures and bankrupt companies, Robinhood account holders are making their riskiest bet yet. 2 . Reply . Founded in 1993 by brothers Tom and David Gardner, The Motley Fool helps millions of people attain financial freedom through our website, podcasts, books, newspaper column, radio show, and premium investing services. If the price doesn’t go up from that it seems like the more they roll exposure to contracts way out in the future the less the price will move upwards. Vacations are cancelled. I can sort of understand the optimism here. All you need is to keep clicking for a specific period of time. But that won't always remain true. I’m ready to be done with oil for now as it’s extremely risky. Economically, a return to $100 on USO would require at least a return to oil's former levels. The decision comes as Credit Suisse moves to "better align its product suite with its broader strategic growth plans". Get up to $100,000 with Try2BFunded! The triple leveraged inverse natural gas ETN has gone off the rails and transitioned from risky to downright dangerous. As 5G technology begins rolling out in 2020, here's an ETF to add exposure to this fast-growing theme. UCO has dropped insane amounts. 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USO (NYSE: USO) currently has an ETF Daily News SMART Grade of A (Strong Buy), and is ranked #1 of 109 ETFs in the Commodity ETFs category. Crude oil has sunk as low as $19 a barrel in recent weeks. 1 0. In this video, I discuss what I'm seeing with the Vanguard High Dividend Yield ETF and why I think it's still potentially risky here. USO made its first change to target contracts with expirations up to three months out instead of one to spread out some risk. According to John Davi, founder and CIO of Astoria Portfolio Advisors, USO is primarily owned by retail investors. You will be able to check on the CPS rate and the speed in which you click. I made the case in a prior article for USO returning to $32. When you add the economic and structural risks together, I don't think there's any way it gets even near $100. Join for free by clicking HERE. That also means that virtually all demand for crude oil has gone away. In fact, if you exclude new inflows into the fund, it could only buy 73,444 April contracts. When USO invested in near-term contracts, it tracked the price of oil pretty closely. The moves that were made diversify a good chunk of the risk that was present in USO previously, but that comes at the expense of returns. It also consist categories like info talk, Informative and quotes, I have found something for gamer and non gamer who want to boost their click speed. These values represent the value of the futures the fund holds. USO can do that for you, but it's important to understand what risks are involved when investing in an ETF that uses futures to derive its value. The 1500% pre-market gains showing on some ticker feeds aren't real. UCO started the year at more than $500. And if you were to purchase futures in oil, you'd be putting up much more capital than you may be comfortable with. When the ETFs recover how high do you think they’ll go? That trading, or roll, comes at a cost and that hurts USO's share price. And the basic demand for crude could take months, if not years, to return as well. Already dumped my position and started trading Tesla, which proved to be a great move. Those fees will add up if we keep seeing $20 oil into 2021. Previously, when USO invested in one-month futures contracts, the fund needed to sell them just prior to expiration and reinvest the proceeds into the next month's contract. Last year, these fees totaled $11.4 million. When futures contracts come up for expiration, the fund purchases new futures contracts, or "rolls forward" futures contracts to extend their duration out another month or so.