Investors Still Love This Oil ETF

  • USO – tracker of crude oil futures – is down 16.6% year-to-date
  • Despite recent bad performances investors aren’t keeping away from USO
  • USO is heading for a fifth straight monthly inflow on speculation crude prices will rebound

The United States Oil Fund (NYSEArca: USO), which tracks West Texas Intermediate crude oil futures, is down 16.6% year-to-date and nearly 52% over the past year, neither those performances nor an array of headwinds still facing oil are keeping investors away from USO.

Oil prices and exchange traded products like USO were under pressure last month after Saudi Oil Minister Ali Al-Naimi ruled out production cuts, arguing that demand will eventually pick up to cover the elevated output, reports Jessica Resnick-Ault for Reuters.

Previously, large oil exporters like Saudi Arabia and Russia have proposed to freeze output near January levels if other countries also followed suit. Oil producers will meet to go over potential freezes in March.

Qatar, Russia, Saudi Arabia and Venezuela have been in discussions to hold output steady at January levels, but only if other producers followed suit. There is also talk that Iraq, also a member of the Organization of Petroleum Exporting Countries (OPEC), could pare production. Without the help of production cuts, prices and oil equities remain vulnerable.

USO “is heading for a fifth straight monthly inflow on speculation crude prices will rebound. The ETF attracted $447 million this month as of Feb. 26, according to data compiled by Bloomberg. West Texas Intermediate crude ended 11 percent higher last week, the most since August. USO held 115,890 contracts of April WTI futures as of Feb. 26, or 24 percent of the futures’ total contracts outstanding,” reports Moming Zhou for Bloomberg.