United States OilUSO

ETF Research and Analysis

by Paul Justice, CFA
Suitability

Though its tracking is not perfect, the simplest reason to own United States Oil USO is that you believe oil prices are going up. However, keep in mind that this fund will not track spot oil prices when the futures curve is behaving abnormally.  Read more 

Bull Case

The fund is an inexpensive option for investing exclusively in crude-oil futures, as it levies a modest 0.80% expense ratio.
Though an imperfect crude oil hedge, the fund's approach--buying near-month WTI crude oil futures contracts--is relatively straightforward. Read more 

Bear Case

WTI crude oil futures, which the fund invests in, can be extremely volatile. In addition, the shape of the futures curve can cause futures returns to deviate from spot price returns. That, in turn, can reduce the fund's effectiveness as a hedge of rising crude oil prices.

Forecasting oil prices is an inexact science at best. Investors seeking to play crude oil prices opportunistically should be mindful of this reality.
Because this partnership does not make cash distributions, you may have to pay taxes at ordinary income rates out of your own pocket even if you don't sell the fund. Read more 

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