Oil ETFs Are Crushing Oil Itself, Thanks to the Futures Curve The oil market's reaction to the Iran war has been nothing short of bizarre. As prices surged and stayed high, one might expect oil futures to follow suit.
But that's not what happened – at least, not for those holding onto oil exchange traded funds (ETFs). The United States Oil Fund (USO) has delivered nearly double the returns of the commodity it tracks.
The shape of the futures curve is largely responsible for this phenomenon. Since February 28, it has been in steep backwardation, with traders bidding up near month contracts and selling later month ones at a discount.