USO ETF Alert: 7 Things to Know About the Oil ETF as Crude Prices Soar


One of the exchange-traded funds that is getting a lot of attention right now is the United States Oil Fund (NYSEARCA:USO). The USO ETF is one of the main funds that investors and traders use to gain short-term exposure to oil prices.

miniature oil barrel and oil well figures on top of stack of money
Source: Shutterstock

Given the surge in crude oil prices in recent days, this fund has taken off. Over the past month, the price of USO has increased approximately 20%. This approximates the move higher in crude oil during this same time period.

Accordingly, investors looking for direct oil exposure may be taking a close look at USO right now.

It seems that we are seeing that play out today, as USO has seen trading volumes roughly three times its average daily volume. This sort of move is impressive, given its ETF status. However, it may not be totally surprising considering the price of crude has surged more than 8% today.

For those interested in direct exposure to oil, let’s dive into what the USO ETF is all about.

What to Know About the USO ETF

  • The United States Oil Fund is an ETF that has been set up to track the price of oil on a given day. It has an expense ratio of 0.83%, or $83 on an initial $10,000 investment.
  • Specifically, USO focuses on daily price movements of West Texas Intermediate (WTI) oil — light, sweet crude produced mainly in the U.S.
  • This ETF holds futures contracts to approximate these price changes.
  • Accordingly, the price swings in USO and the spot price of WTI may differ slightly.
  • However, over the long run, the USO ETF and the price of WTI, closely correlate.
  • Every month, these contracts are rolled over, resulting in periodic spats of volatility from time to time.
  • Thus, investors holding this ETF typically do so on a short-term basis.

On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the Publishing Guidelines.

Chris MacDonald’s love for investing led him to pursue an MBA in Finance and take on a number of management roles in corporate finance and venture capital over the past 15 years. His experience as a financial analyst in the past, coupled with his fervor for finding undervalued growth opportunities, contribute to his conservative, long-term investing perspective.

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