The commodity exchange traded fund tied to West Texas Intermediate crude oil prices is hovering around a four month low. Oil traders shouldn’t expect the market to tighten anytime soon as the U.S. is inundated with black gold.

The U.S. Oil Fund (NYSEArca: USO) declined 1.3% Tuesday. USO has dropped 10.3% over the past three months.

WTI crude oil futures were also down 1.5% Tuesday, trading around $93.2 per barrel. [Capture the U.S. Oil Boom with the Unconventional Energy ETF]

Oil was down to its lowest level in over four months as speculators anticipate inventories to rise for the seventh week as U.S. crude output jumped to a 24-year high in October while refinery demand dipped, reports Mark Shenk for Bloomberg.

“The market is pulling back on the perception that the supply-demand balance isn’t going to tighten anytime soon,” Stephen Schork, president of the Schork Group Inc., said in the article.

U.S. crude oil production rose to 7.9 million barrels a day as of Oct. 18, the fastest clip since March 1989. [Capitalize on the U.S. Oil Boom with Yield-Generating MLP ETFs]

“The U.S. is swimming in oil right now, and there’s been no sign of a pickup in seasonal demand,” Addison Armstrong, director of market research at Tradition Energy.

In contrast, the United States Brent Oil Fund (NYSEArca: BNO), which tracks the Brent crude oil benchmark, has gained 0.4% over the past three months.

Subscribe to our free daily newsletters!
Please enter your email address to subscribe to ETF Trends' newsletters featuring latest news and educational events.