The United States Oil Fund (USO) has risen 114% year to date as crude prices rally, but over the past decade it returned only about 57%, roughly half the gain of spot WTI crude. This discrepancy is caused by roll costs, where USO must continually sell expiring futures and buy more expensive later contracts in a contango market, eroding returns. In 2020, USO restructured to hold contracts further out the curve to avoid negative price shocks, reducing responsiveness to spot prices. Investors seeking pure oil price exposure might prefer Brent-focused BNO or energy stocks like XLE, which avoid futures roll drag. Monitoring the WTI futures spread helps gauge USO's roll cost impact in real time. USO suits short-term trades but structurally reduces long-term gains when futures are in contango, which has been common over the last decade.
