A recent investment strategy by USO, the largest crude oil ETF in the United States, has attracted regulatory attention. After the last USO used this strategy, there was a shocking negative oil price incident in international oil prices.

The United States Oil Fund (USO), the largest oil ETF in the United States, is resuming its investment strategy before the COVID-19 epidemic. This strategy has attracted close attention from regulators and disrupted the market in 2020. It is considered to be one of the driving forces behind the shocking negative oil price event!

The USO, with assets of $1.2 billion, will begin reallocating most of its positions to recent oil futures contracts from September, rather than spreading its risk exposure across the entire futures curve.

On the eve of the negative oil price incident in April 2020, the USO also decided to pile up bets on recent oil contracts. At that time, the size of USO had soared to over $3 billion, and the proportion of recent oil contracts held in all positions was as high as 20% -25%. After the oil price collapse, the selling of USO pushed the WTI crude oil futures benchmark contract to the brink, and later the Chicago Mercantile Exchange (CME) ordered USO to reallocate funds.

Currently, contracts expiring in October 2023 account for approximately 20% of USO holdings, November contracts account for 20%, December contracts account for 15%, January 2024 contracts account for 15%, February contracts account for 10%, March contracts account for 5%, and June contracts account for 15%.

The USO stated in a recent statement that it retains the ability to invest in other products such as later term contracts and over-the-counter swaps if market conditions, regulatory requirements, or other factors require it.

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