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Scan for outdated or missing drivers - takes under a minuteDriver Scan →Repair Windows errors before they cause bigger problemsFix Now →USO is not a long-term ownership stake in crude oil. The United States Oil Fund, LP (USO) uses crude-oil futures, so its return can differ from spot oil over time—especially as futures contracts are replaced, or “rolled.” Before holding USO for an extended period, understand its benchmark, the shape of the futures curve, the fund’s roll process, and the effects of expenses and collateral interest.
What USO tracks—and what it does not
USO is an exchange-traded security that obtains exposure through futures contracts; owning shares does not give you a claim on barrels of oil. USCF describes its objective as reflecting daily percentage changes in the spot price of light sweet crude oil delivered to Cushing, Oklahoma, measured using a specified short-term futures benchmark, with collateral interest added and expenses deducted. USCF’s disclosure and fund information
The distinction matters over long holding periods. The objective is framed around daily changes, not a promise that USO’s return over months or years will equal the change in spot crude. The issuer describes its objective using an average daily percentage-change measure over 30 successive valuation days, with a plus-or-minus 10% tolerance relative to the benchmark. That is a stated measurement method—not a guarantee of exact tracking or of any particular long-term result. USCF’s USO product page
How contango and backwardation affect returns
Futures contracts have different delivery dates and can trade at different prices. As a contract nears expiration, a fund that maintains futures exposure may need to sell or close it and obtain exposure through a later-dated contract. The relationship between those prices can affect returns independently of the overall direction of oil prices.
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Contango can create a headwind
USCF describes contango as a curve in which the near-month futures contract is priced below a later contract. In this situation, absent an offsetting move in crude prices, the near-month contract tends to decline as it approaches expiration. Replacing exposure with a more expensive later contract can therefore be a drag on returns. If contango persists, the effects can accumulate; USCF warns that prolonged contango may significantly harm USO’s NAV and total return, and investors could lose part or all of their investment. USCF’s contango risk disclosure
Backwardation can be supportive, but is not a guarantee
Backwardation is the reverse relationship: the near-month contract is priced above the next contract. USCF says that, absent the overall movement in oil prices, the benchmark contract tends to rise as it approaches expiration in this setting. That can support returns relative to a flat oil-price backdrop, but it does not ensure that USO will rise. Oil-price moves, costs, collateral interest, and tracking differences still matter. USCF’s futures-curve discussion
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Why USO can fall while crude prices rise
Oil can rise over a period while USO falls, or USO can rise by less than a reader expects, because the fund’s result reflects more than the spot-price direction. The futures contracts it holds and replaces may respond differently from spot crude, and a contango-related roll drag can offset some or all of a rise. Expenses reduce returns, while collateral interest contributes to them; tracking differences can also affect the result. The issuer’s objective expressly accounts for collateral interest and expenses, but does not promise a fixed relationship between USO and spot oil over an investor’s chosen holding period. USCF’s USO product page
USO’s roll process and holdings can change
Do not assume that USO always holds a single, fixed near-month contract or follows an unchanging roll schedule. USCF says the fund may hold contracts beyond the benchmark or other oil-related investments in response to factors including regulation, risk mitigation, liquidity needs, and market conditions. Its document library describes a five-day roll method beginning January 1, 2026: the fund seeks to rebalance about 20% each day of the announced percentage of the notional value of nearest-month instruments and specified other instruments. The projected roll dates may change without notice, so this is a dated disclosure rather than a permanent rule. USCF’s document library
For a decision tied to a particular date, check the latest prospectus, roll calendar, holdings, and fact sheet on USCF’s official site. A current holdings snapshot and current expense figure are not established here, so do not rely on an older schedule or quote an unverified fee.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.What to check before holding USO long term
- Your intended exposure: Decide whether you want futures-based exposure linked to a short-term benchmark or another form of oil exposure. USO is not ownership of physical crude.
- The current futures curve: Check whether the relevant contracts are in contango or backwardation. The curve can change, and its influence is only one component of returns.
- Current fund documents: Review USCF’s latest prospectus, holdings, roll calendar, and fact sheet for the strategy, current positions, schedule, and expenses.
- Your time horizon and risk tolerance: Compare those with the possibility of cumulative roll-related drag and the issuer’s warning that investors could lose part or all of their investment.
USCF puts the distinction plainly: “AN INVESTMENT IN USO SHOULD NOT BE VIEWED AS AN INVESTMENT IN THE BENCHMARK OIL FUTURES CONTRACT OR LIGHT SWEET CRUDE OIL.” USCF’s USO product page The fund documents explain the product’s mechanics and risks; they do not determine whether it suits any particular investor.
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