Oil is everywhere…literally… oversupplied to push prices to 2009 lows back below $40 a barrel. The global glut and the inability of OPEC to cut production, intended or not to break the Shale industry, have turned sentiment on its head.
The cure for the high price was higher prices…innovation and ingenuity unlocked untapped resources.
It was not long ago that triple digit Crude was the wall of worry that was going to slow economic growth. Now it is said that slow economic growth has knocked down Oil more than 50% since summer of 2014.
Truth be told the DOLLAR surge is partially responsible for the Oil fall.
The popular United States Oil Fund USO has dropped from $24 to $12 in the last year.
CAUTION: When Crude was moving higher the USO ETF stayed mostly steady.
USO is not a great vehicle to play a bottom bounce in Crude Oil because of the way the ETF is constructed. Front-month futures contracts are held and sold as they come to their conclusion. These sales often mean consistently selling cheaper contracts and buying more expensive ones.
Nobody knows when… that slide will stop in Crude…it is more certain that USO is not the way to go trying to find that bottom base.
