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Crude Oil: Different Gaps, Same Thing

Published 05/14/2018, 10:26 AM
Updated 07/09/2023, 06:31 AM

Everything was green, again, at the start of U.S. trade (except, mercifully, for bonds). Crude oil has been particularly strong for many months, now, and I wanted to point out an interesting little tidbit.

If you glance at the oil ETF USO – a very popular instrument for trading crude oil – you'll see its price gap is miles and miles away:

Yearly United States Oil ETF

However, USO is a pretty terrible proxy for crude oil itself (by way of example, USO is about one TENTH the price it was at its peak and I think we all know that crude oil hasn’t dropped 90% in value). Crude's continuous futures contract is far more helpful and the same price gap on the same date is, as you can see, much, much closer to present price levels.

Crude Oil Futures

As superbly as oil has been doing, I just thought I’d quietly point this out, as we are only a few percent away after having climbed so far out of the gutter.

Latest comments

What's the takeaway here, USO has more to rise to reflect the recent rise?
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