What Happened to United States Oil Fund, LP (USO)?

The United States Oil Fund, LP (USO) was launched on April 10, 2006, by USCF Investments, with the objective of reflecting the daily percentage changes in the spot price of light, sweet crude oil delivered to Cushing, Oklahoma, as measured by a specified short-term futures contract on the New York Mercantile Exchange (NYMEX). For years, USO primarily achieved this by investing in near-month WTI crude oil futures contracts, rolling them over to the next month before expiration.

However, the year 2020 presented an unprecedented crisis for USO and the global oil market. A confluence of factors, including the COVID-19 pandemic's impact on demand, a price war between Saudi Arabia and Russia, and a severe oversupply, caused crude oil prices to plummet. On April 20, 2020, WTI crude oil futures for May delivery famously plunged into negative territory, meaning producers were effectively paying buyers to take oil due to a lack of storage capacity. This extreme market condition exposed significant structural flaws and risks within USO's design, particularly its heavy reliance on front-month futures in a market experiencing steep contango (where future contracts are more expensive than near-term ones), leading to substantial 'roll costs' that eroded investor returns.

In response to the turmoil and to avoid breaching regulatory position limits imposed by the CME Group, USO was forced to make rapid and drastic changes to its investment strategy in April 2020. It began diversifying its holdings across a wider range of futures contracts with later delivery dates, moving away from its traditional front-month focus. The fund also underwent an 8-for-1 reverse share split on April 28, 2020, to maintain its share price. Furthermore, USO faced issues with issuing new shares, leading to concerns about its ability to track its benchmark accurately and potentially trading at a significant premium to its Net Asset Value (NAV).

The rapid changes and disclosures attracted regulatory scrutiny. In May 2020, both the U.S. Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) opened probes into whether USO had adequately disclosed the risks to investors. By August 2020, the SEC recommended enforcement action against USO, its issuer USCF, and its CEO, John Love, citing disclosure failures regarding limitations on its ability to invest in oil futures. Ultimately, in November 2021, USO and USCF agreed to pay $2.5 million in penalties to settle parallel cases with the SEC and CFTC, without admitting or denying the findings.

Following the turbulent period, USO announced in August 2023 its intention to revert to its pre-2020 strategy, allocating the majority of its investments to the nearest oil futures contract, effective September 2023. This shift indicated a belief that oil market stability was returning to pre-COVID levels. As of March 2026, USO continues to operate, with its performance heavily influenced by global events. Recent reports from March 6-8, 2026, indicate that USO has seen a significant rally, with its price surging due to escalating Middle East conflicts, tanker disruptions, and supply cuts, leading to strong bullish sentiment among investors anticipating energy supply shocks. The fund's assets under management (AUM) were reported around $1.23 billion to $1.76 billion in February-March 2026. Investors are reminded that USO, as a commodity pool, issues a K-1 tax form, which can be more complex than standard 1099 forms.