$56.58
$141.22
bear $56.58
base $98.82
bull $141.22
margin of safety $57.00
market price* $161.76
Business condition attached to the margin of safety
Authorized Participants are creating and redeeming shares normally (as they could not in April 2020, when the fund ran out of registered shares and suspended creations), so that any gap between the market price and net asset value can close. The margin-of-safety price assumes net asset value near the June 30, 2026 level of $105.50 per share; it is roughly a 45% discount to net asset value and scales with the current published figure.
United States Oil Fund (USO) is not an operating business. It is an exchange-traded commodity pool, run by United States Commodity Funds LLC, that holds NYMEX light sweet crude oil (WTI) futures, mainly the near-month contract, which it rolls into the next month over five days at the start of each month. The cash backing those positions sits in Treasuries and money-market funds. The fund has no customers, products or earnings of its own. A share is worth its slice of the fund's net assets, adjusted for what the fund's structure adds to or takes away from the oil price over time. We do not forecast the price of oil. Every case below holds the oil price flat, and the shares will rise and fall with oil whatever our figures say. These numbers are not a price forecast. Starting point. At June 30, 2026 the fund reported net assets of $1.754 billion across 16.62 million shares, or $105.50 per share. That is up from $69.10 at December 31, 2025, after oil futures rallied in the first half of 2026. What separates a holder's result from the oil price. There are three things. First, interest on the Treasury collateral: 3.92% of average net assets in 2025 and 4.77% in 2024. Second, expenses: a 0.45% management fee plus other costs, together 0.86% of average net assets in 2025, up from 0.70% in 2023. Third, the gain or loss from rolling futures each month. When later-month contracts cost more than the expiring one (contango), rolling loses money. When they cost less (backwardation), it gains. We treat the collateral interest as neutral, because it is the return on cash that any holder could earn and simply pays for the passage of time. Each case is therefore today's net assets, minus the value today (at 6% a year) of ten years of expenses, plus or minus ten years of roll results, all measured against today's net assets. The record. Each annual report compares the fund's yearly change in net asset value with the change in the front-month oil price. From 2017 to 2025, USO fell behind the front-month price by about 4% a year, compounded. That result is dominated by 2020. In April 2020 oil storage ran short, the futures market went into extreme contango and the front contract briefly traded below zero. The fund's net asset value fell 68% that year against a 21% fall in the front-month price, and the fund carried out a 1-for-8 reverse split on April 28, 2020. Leaving out 2020, the fund ran about 7% a year ahead of the front-month price, helped by strong backwardation after 2021; in 2022 alone it beat the front-month price by 21 points. With collateral income and expenses stripped out, rolling cost about 5.4% a year over all nine years and gained about 5.4% a year over the eight years excluding 2020. The latest annual report says the market was in mild contango during 2025. The longer history is harsher: net asset value per share fell about 83% between the fund's April 2006 launch and the end of 2016, a period when the futures market spent long stretches in contango. Bear case, $56.58. Rolling repeats its full 2017-2025 record, including a 2020-style contango shock within the decade: a cost of 5.4% a year. Expenses keep rising, to 0.90%. Together these wear away about 6.3% of today's net assets each year, which over ten years is worth about $49 per share today. Base case, $98.82. Rolling neither helps nor hurts on average. The mild contango in the latest report costs a little, while the record outside the 2020 shock has been favourable, so we take the midpoint of zero. Expenses stay at the 2025 level of 0.86%. The only lasting drag is then expenses, worth about $6.70 per share today. Bull case, $141.22. The backwardation of 2021-2025 continues at the average of the eight years outside 2020, a roll gain of about 5.4% a year. Expenses ease to 0.80%, in line with 2024 and with the lower run rate of early 2026, when the fund was larger. Net, the fund gains about 4.6% of today's net assets a year over the oil price, worth about $36 per share today. This needs the futures curve to stay in backwardation for a decade, which it has done only in stretches. What could make this wrong. The oil price outweighs everything else: a share at $105.50 will be worth far more or far less as crude moves, and none of that is in these cases. A long run of contango like 2009-2016 would push results toward or below the bear case. The fund is also large compared with exchange limits. NYMEX accountability levels are 10,000 contracts in any one month and 20,000 across all months, and federal position limits apply with no exemption for USO. These can push it into other contract months and away from its benchmark. In April 2020 the fund also ran out of registered shares and had to stop creating new ones, which let the market price drift away from net asset value. Price. Authorized participants create and redeem shares at net asset value, so the market price normally stays very close to it. Setting aside the oil price, the only way this fund can produce 20% a year is through a large discount to value that later closes. The margin-of-safety price of $57 is roughly the bear case and about 45% below the June 2026 net asset value. It applies only while creations and redemptions are working normally, and it should move up or down with the published net asset value. The fund reports no operating earnings, so there is no earnings history to anchor on; the valuation rests entirely on its net assets and the costs and gains of holding them.