Iraq, Iran Conflicts Renew Oil ETF Attention

Oil traders should be aware that the holdings of ETFs like USO’s underlying portfolio includes front-month WTI future contracts, and the oil futures market is currently in a state of contango. Consequently, USO could experience a negative roll yield when rolling a maturing futures contract for next month’s contract.

“On Friday, U.S. President Donald Trump said he was officially withdrawing his certification of Iranian compliance with the nuclear deal, in what is being billed as part of a tougher strategy on Iran,” according to Oil Price.com. “President Trump passed the nuclear deal back to Congress to review and amend the law. If no other countries support the U.S. push for more sanctions, Iran’s production is unlikely to drop by 1 million bpd, according to Goldman.”

Investors have added nearly $65 million to USO since the start of the fourth quarter.

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