The United States Oil Fund (NYSEArca: USO) was one of this year’s best-performing commodities exchange traded products, but that changed recently as the widely followed oil fund fell into a new bear market. In early June, USO was trading over $12. Now, it resides below $10.
While production has declined in the U.S., recently rebounding oil prices are encouraging exploration and production companies to revisit spending plans with some increasing capital expenditures. That has some oil market observers concerned about a rising rig count and the subsequent impact on crude prices.
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Following USO’s recent reentry into a bear market, data suggest some traders are buying the dip.
“Investors in the biggest exchange-traded fund that tracks oil prices last week piled in even as crude had the biggest drop since April. The U.S. Oil Fund attracted $126.6 million last week, the best inflow since February. West Texas Intermediate crude retreated 5.9 percent last week to settle at $41.60 per barrel,” reports Ryan Sachetta for Bloomberg.
[related_stories]Oil bulls have to contend with a familiar factor: The dollar. Although the Federal Reserve appears increasingly unlikely to raise interest rates this year, the greenback has recently been rallying, weighing on oil prices in the process.