Geopolitical unrest in Venezuela have recently helped oil’s cause. Venezuela is Latin America’s largest oil producer, but that production is continually sliding because of the government’s heavy hand in the oil business and its refusal over the years to make the necessary infrastructure investments to make oil production there more economical.

“Crude Oil Production in Venezuela decreased to 2156 BBL/D/1K in June from 2189 BBL/D/1K in May of 2017. Crude Oil Production in Venezuela averaged 2423.92 BBL/D/1K from 1973 until 2017, reaching an all time high of 3453 BBL/D/1K in December of 1997 and a record low of 594 BBL/D/1K in January of 2003,” according to Trading Economics.

Related: Venezuela Political Volatility: A Catalyst for Oil?

USO is often afflicted by contango, but there is evidence that situation is abating. Contango occurs when the price on a futures contract is higher than the expected future spot price, which creates the upward sloping curve on future commodity prices over time. Essentially, the phenomenon reflects a current spot price that is lower than the futures price.

“Now, things are changing. The contango has narrowed significantly, to the point of virtually disappearing. Which is to say, oil contracts for near-term delivery are priced just about the same as contracts six months ahead,” according to OilPrice.com.

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