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United States Oil Fund (USO) Hits a 52-Week High

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United States Oil Fund (USO - Free Report) is probably a suitable pick for investors looking to gain momentum. The fund just hit a 52-week high and is up 129.7% from its 52-week low price of $24.75/share.

Let’s take a look at the fund and its near-term outlook to get an insight into where it might be headed:

USO in Focus

The fund’s investment objective is for the daily changes, in percentage terms, of its shares’ net asset value (NAV) to reflect the daily changes, in percentage terms, of the spot price of light sweet crude oil delivered to Cushing, OK, as measured by the daily changes in the Benchmark Oil Futures Contract. It has AUM of $2.86 billion and charges 83 basis points in annual fees.

Why the Move?

Oil prices crossed the $80-a-barrel mark amid the ongoing global power crisis. The price of crude reached a seven-year high level. Shrinking crude inventories, supply disruption in the Gulf of Mexico following a couple of hurricanes and surging fuel demand are pushing oil prices higher.

Soaring coal and natural gas prices in Europe and Asia due to a supply-demand imbalance before the severe winter season are driving the consumption of diesel and kerosene (according to a Bloomberg article). TheOrganization of the Petroleum Exporting Countries (OPEC) and a Russia-led group of oil producers, collectively called OPEC+, decided to raise production by 400,000 barrels a day each month. Also, the coronavirus vaccine rollout is gradually controlling the spread of the outbreak across the globe and augmenting demand for the fuel. This makes funds like USO an attractive investment option.

More Gains Ahead?

It seems like the fund will remain strong with a positive weighted alpha of 95.80, which gives cues of a further rally.


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