Advances in U.S. shale oil production technologies are contributing the to supply surplus and weighing on any oil price gains. It has become much cheaper for the upstart U.S. shale producers to extract oil out of the ground, sparking U.S. oil output to its highest levels since the 1970s.
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Still, some traders are positioning for a near-term pullback in USO.
“More broadly, options traders are more bearish in the front-month series. Peak open interest for the energy exchange-traded fund (ETF) is found at the April 11.50 and 12 puts, where more than 311,500 contracts collectively reside. Data from the major options exchanges confirms significant buy-to-open activity at each strike in late January, when the shares were trading around $13,” according to Schaeffer’s.
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