USO Reverts to Original Futures Strategy

USO Reverts to Original Futures Strategy

The ETF’s new blueprint will more closely mimic the price of oil.

Finance Reporter
Reviewed by: Lisa Barr
Edited by: Ron Day

The United States Oil Fund LP (USO)—the largest oil ETF in the U.S., with $1.3 billion in assets under management—will revert a strategy that drew regulatory backlash in 2020 by allocating the majority of its investments to the nearest oil futures contract.  

The fund will implement the new investment blueprint in September. Currently, USO distributes its investments across the futures curve, with its furthest futures contracts invested being June 2024.  

Since USO’s assets under management have tapered off since 2020, when the ETF had about $3 billion, its strategy could draw less regulatory scrutiny, according to Bryan Armour, ETF analyst at Morningstar.  

Specifically, the further that holdings are allocated along the futures curve, the more the fund strays from the actual spot price; in this case, oil prices. When this happens, a futures contract strays further away, and thus other considerations (such as interest rates) influence the futures price. 

CME Group Inc., which operates the Chicago Mercantile Exchange and the New York Mercantile Exchange, ordered USO to change its investment strategy after the COVID-19 pandemic triggered a 2020 oil price crash.  

USO Impacted the 2020 Crash 

Because of the fund size and number of futures contracts it purchased, the ETF actually worsened the 2020 crash. “If one particular participant becomes a significant size of one side of the futures market, the CME will impose position limits,” said Armour.  

Now, the fund aims once again take up the strategy that most closely mimics the price of oil, which was the firm’s stated strategy at its outset. The strategic shift is not based on bullish or bearish predictions about the price of oil, but is a play to more closely align with the fund’s original stated strategy, according to Armour.  

In a statement, USO said it can still invest in later-dated contracts and other products.  


Contact Lucy Brewster at [email protected] 

Lucy Brewster is a finance reporter at covering asset managers, emerging technologies, and regulation. She hosts webinars and appears on Exchange Traded Fridays,’s flagship podcast. She previously was a finance fellow at Fortune Magazine where she covered markets, investment strategy, and venture capital. She has also been a freelancer writer at the publication Mergers & Acquisitions and a research fellow at the Historic Hudson Valley. 

She graduated from Vassar College in 2022 with a degree in History and was an editor of The Miscellany News, the college's award winning student run newspaper. 

Lucy lives in Brooklyn, NY, and in her free time she loves to run and find new recipes to cook.