The United States Oil Fund (NYSEArca: USO) , which tracks West Texas Intermediate crude oil futures, was pummeled in the fourth quarter. The benchmark oil exchange traded product slid 37.76% in the last three months of 2018 on its way to a yearly loss of 19.57%.

Oil prices have been steadily on the decline and are off by over 40% since the October highs, despite an agreement earlier in December between the Organization of Petroleum Exporting Countries and its allies like Russia to cut a combined 1.2 million barrels per day from the market in 2019, the Wall Street Journal reports.

Still, some market observers see upside potential for oil to start the new year and some of that bull thesis lies with OPEC.

“To start with, the OPEC+ cuts take effect at the start of January, and in reality, even if the group does not reach the promised 1.2 million barrels per day (mb/d) right away this week (it surely won’t), the reductions have been likely underway for some weeks,” reports OilPrice.com. “By some counts, OPEC production fell more than 800,000 bpd in December, most of which came from Saudi Arabia.”

New Year, Better Returns?

USO resides nearly 29% below its 200-day moving average and just 4.66% above its 52-week low.

Late in 2018, crude was also caught up on the general risk-off market sentiment as the U.S. government shutdown, rising interest rates and the trade war between the U.S. and China rocked the markets and exacerbated concerns over global growth.

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