USO Is Up 64% This Year and Still Losing the Long Game

Amidst world turmoil, the United States Oil Fund (NYSEARCA:USO) is still up 64.% year-to-date as of March 9, 2026, and Reddit is buzzing. However, the fund has returned only 15% over the past three years despite oil going through multiple dramatic cycles, and this gap comes down to one mechanical cost: contango drag. For its part, WTI crude has climbed from $57.21 on January 2 to $71.13 as of March 2, driven by geopolitical supply disruptions in the Persian Gulf, and USO has moved sharply with it.

USO does hold front-month WTI futures contracts and rolls them forward each month, selling the expiring contract and buying the next. When the futures curve is in contango, later-dated contracts cost more than near-term ones, so that the monthly roll is a guaranteed loss. You sell low, buy high, repeat. Over time, those small losses compound into a meaningful gap between what oil prices do and what USO shareholders actually earn.

Reddit Is Bullish, But Some Traders Know the Trap

Weekly Reddit sentiment for USO stands at 85 out of 100, driven almost entirely by supply-disruption narratives. The top posts tell the story:

• r/wallstreetbets post “$6 per gallon of gas is coming” pulled 2,861 upvotes and 551 comments, with traders piling into oil bets on macro supply fears.
• A post titled “Iraq oil output drops 60% as Iran war blocks tankers through Strait of Hormuz” drew 2,533 upvotes and 436 comments, cementing the geopolitical narrative.
• A thread in r/stocks asking “Best way to play oil ripping if you can’t buy commodity contracts: USO or ProShares Ultra Bloomberg Crude Oil ETF (NYSEARCA:UCO)?” generated 47 comments

$6 per gallon of gas is coming (actual analysis + graphs included, puts on my degree)
by u/wallstreetbets in wallstreetbets

Iraq oil output drops 60% as Iran war blocks tankers through Strait of Hormuz
by u/wallstreetbets in wallstreetbets

Best way to play oil ripping if you can’t buy commodity contracts: USO or UCO?
by u/stocks in stocks

The “USO or UCO?” thread is telling. Experienced retail traders know USO underperforms in sustained contango. That post scored a sentiment score of only 70, noticeably lower than the broader oil excitement, signaling skepticism about the fund specifically.

The Cost Contango Doesn’t Advertise

When you look at the numbers carefully, USO carries a 0.6% annual expense ratio, which looks cheap, and the real cost is the roll yield. In contango environments, that monthly roll can subtract several percentage points annually on top of the management fee, none of which shows up as a line item. The fund’s January 2026 net income of $142 million was almost entirely unrealized gains on futures contracts, meaning those gains can reverse just as fast as the curve shifts.

For traders riding a short-term supply shock, USO has moved sharply with WTI in 2026. Separately, integrated producers like ExxonMobil (NYSE:XOM | XOM Price Prediction) and Chevron (NYSE:CVX) hold physical assets and equity stakes in oil production, giving them a different structural relationship to oil prices than futures-based funds.