#$USO

As @agelston.bsky.social has pointed out, backwardation drives $USO higher than spot or front-month crude, because it's constantly selling the closest-to-delivery futures (high) and buying deferred futures (low). Crude curves have had a small backwardation since 2021, but this turbo-charges it.

This is true across a range of asset classes btw - spot Brent, short-term CFDs, Brent/WTI futures, $USO skew, energy markets, credit, liquid rates. A physical market forcing event will eventually lead to mechanical selling but nobody wants to pre-position for that because it will be very brief.

This is WILD. Call skew isn't as jacked but there is a ton of hedging against a prolonged Hormuz closure going through in $USO options

Oil futures ETFs have a natural backwardated position; take $USO for example, it’s constantly buying second month and selling first month so situations like this boost its returns relative to a flat crude curve. Conversely it gets hit hard by contango (the opposite situation).

$USO erasure* *if anyone reading this buys $USO because you saw it here for the first time I’m going to be livid, don’t do that.

Somewhat interestingly, call skew in $USO has actually been falling eg investors are getting *less* willing to pay for exposure to really big jumps in price as opposed to merely large jumps in price.

Another $10,000 to $uso calls

Poised to be the first time since 4/30/2020 that $USO is +5% with $XLE negative

Nobly creating liquidity for the $USO degens by buying puts for next week on the off chance everything is cool (sold my longer term puts because i think we are at the point where the price will just be high for a bit)

Desks are looking at next week’s Trump-Xi meeting in Washington plus more Fed speakers. Oil is still sitting above $100. After the first rate hike in three years, that’s the mix: policy, energy, and China. $USO $SPY $NVDA

OVX (the VIX for $USO, the WTI ETF) is poised for its third consecutive decline. Before this, hadn’t even had back-to-back drops since Feb 24.

if youre too broke for a terminal you can get a feeling for the live oil price with ETFs or something like $USO which just jumped from 86 to 88