Comments on: Why We Expect Higher Oil Prices http://stockmarketbeat.com/blog1/2006/09/14/why-we-expect-higher-oil-prices/ Our beat: The stock market. Our job: Beat it. Tue, 06 Jan 2009 02:07:38 +0000 http://wordpress.org/?v=2.2.1 By: Trent http://stockmarketbeat.com/blog1/2006/09/14/why-we-expect-higher-oil-prices/#comment-30644 Trent Wed, 16 May 2007 13:52:53 +0000 http://stockmarketbeat.com/blog1/2006/09/14/why-we-expect-higher-oil-prices/#comment-30644 I feel your pain, as I am also long USO. To some extent you are right. According to the USO 10K: <blockquote>The investment objective of USOF is for the changes in percentage terms of the units’ net asset value ("NAV") to reflect the changes in percentage terms of the spot price of WTI light, sweet crude oil delivered to Cushing, Oklahoma, as measured by the changes in the price of the futures contract on WTI light, sweet crude oil as traded on the New York Mercantile Exchange that is the near month contract to expire, except when the near month contract is within two weeks of expiration, in which case the futures contract will be the next month to expire.</blockquote> Gasoline typically tracks both the oil price and any special tightness or overcapacity at refineries. In addition, the risk factors section of the 10K outlines several scenarios in which the USO units might not trade in line with the oil price. So while it is an efficient way to "play" oil for many investors it won't always work. I feel your pain, as I am also long USO. To some extent you are right. According to the USO 10K:

The investment objective of USOF is for the changes in percentage terms of the units’ net asset value (”NAV”) to reflect the changes in percentage terms of the spot price of WTI light, sweet crude oil delivered to Cushing, Oklahoma, as measured by the changes in the price of the futures contract on WTI light, sweet crude oil as traded on the New York Mercantile Exchange that is the near month contract to expire, except when the near month contract is within two weeks of expiration, in which case the futures contract will be the next month to expire.

Gasoline typically tracks both the oil price and any special tightness or overcapacity at refineries.

In addition, the risk factors section of the 10K outlines several scenarios in which the USO units might not trade in line with the oil price. So while it is an efficient way to “play” oil for many investors it won’t always work.

]]> By: Heywood http://stockmarketbeat.com/blog1/2006/09/14/why-we-expect-higher-oil-prices/#comment-30634 Heywood Wed, 16 May 2007 13:28:14 +0000 http://stockmarketbeat.com/blog1/2006/09/14/why-we-expect-higher-oil-prices/#comment-30634 Why have Gasoline Prices recently Skyrocketed, yet my share Prices of USO have actually dropped in value? Shouldn't Gasoline Track the price of Crude? Why have Gasoline Prices recently Skyrocketed, yet my share Prices of USO have actually dropped in value? Shouldn’t Gasoline Track the price of Crude?

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