What Is USO? United States Oil Fund LP

USO is the United States Oil Fund, a commodity pool managed by USCF Investments that seeks to track the daily percentage change in the price of West Texas Intermediate (WTI) crude oil. It does this by holding near-month NYMEX crude oil futures contracts, backed by cash and short-term Treasuries as collateral, rather than storing any physical oil.

Structurally, USO is a limited partnership, so investors receive a Schedule K-1 at tax time instead of the usual 1099. Its net expense ratio of roughly 0.86% is high relative to equity index funds and reflects the real cost of trading and rolling futures. USO is best understood as a trading instrument that mirrors the daily direction of oil, not a passive long-term holding.

Approximate weights as of mid-2026; refresh quarterly from USCF Investments's fund page. Each ticker links to its individual stock guide in Walnut.

USO does not own barrels of oil. It holds near-month WTI crude oil futures contracts traded on the NYMEX, plus cash and Treasury bills posted as collateral against those positions. In practice the portfolio is close to fully exposed to front-of-curve WTI futures at any given time.

This matters because the futures price and the spot price of oil are not the same number. USO tracks the futures, so its returns reflect both the change in oil prices and the cost of continuously rolling expiring contracts into new ones. After the 2020 oil crash, USO spread its exposure across several nearby contract months to reduce the risk of a single front-month contract collapsing.

The clearest alternative to USO is an energy equity ETF such as XLE or VDE, which holds oil and gas companies like ExxonMobil and Chevron. Those funds pay dividends and can compound over decades, but they carry company-specific and equity-market risk and do not move one-for-one with the oil price.

USO tracks the commodity itself far more closely, which is why traders use it to express a direct short-term view on crude. The tradeoff is that USO earns no income, costs more to hold, and suffers roll drag in contango. For a pure oil-price bet USO is the more direct tool, while energy stocks are the more durable long-term holding.

USO's defining risk is the futures roll. Because futures contracts expire, USO must repeatedly sell contracts that are about to expire and buy later-dated ones. When the market is in contango, meaning later contracts cost more than near ones, each roll locks in a small loss even if oil prices never move. Over months this negative roll yield can pull USO well below the return of spot oil.

The opposite condition, backwardation, occurs when near contracts cost more than later ones and actually adds a positive roll yield. Because oil frequently sits in contango, long-term holders of USO have historically seen returns lag the headline oil price. This is why USO is treated as a tactical instrument rather than a set-and-forget oil position.

USO fits investors who want direct, liquid exposure to the daily direction of crude oil for a defined, usually short-term view, and who understand that roll costs and contango can erode returns over longer holds. It carries no dividend, a relatively high expense ratio, and K-1 tax paperwork.

It is generally not used as a core, long-term holding the way a broad equity or bond fund would be. Whether any oil exposure belongs in your portfolio depends on your goals, risk tolerance, and time horizon. Walnut is not an investment adviser and this is not a recommendation.

USO trades on the NYSE Arca exchange under the ticker USO and can be bought through virtually any US brokerage, including Robinhood, Fidelity, Schwab, and Public, often in fractional shares. Because it is highly liquid, spreads are typically tight during market hours.

If you already hold USO or plan to, you can connect your brokerage to Walnut to track it alongside your other positions and see how a tactical oil position fits within your broader thesis. Walnut mirrors your holdings read-only and never places trades on its own.

USO is the most liquid US-listed way to trade the daily direction of WTI crude, but it holds futures, not barrels, so contango and monthly roll costs can erode returns versus spot oil over long holds. It fits short-term tactical views on oil, not a buy-and-hold portfolio. Walnut is not an investment adviser and this is not a recommendation.

Whether USO is worth buying today depends more on your time horizon and what you already hold than on any single call. We walk through valuation, concentration, and what would have to be true for it to outperform from here in is USO a buy?

USO yields 0% as of mid-2026, paid by passing through the dividends of its underlying holdings. For the payout schedule, history, and how the distributions are taxed, see USO dividend: yield and schedule.