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

"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."

"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."

"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"

The United States Oil Fund (USO) has gained 64% year-to-date through March 2026, driven by geopolitical supply disruptions and rising WTI crude prices from $57.21 to $71.13. However, USO has returned only 15% over three years despite oil's dramatic price cycles. This underperformance stems from contango drag—a mechanical cost arising from USO's monthly futures roll strategy. When the futures curve is in contango, the fund sells expiring near-term contracts at lower prices and buys next-month contracts at higher prices, creating guaranteed losses that compound over time. While Reddit sentiment remains bullish at 85/100 based on supply disruption narratives, experienced traders recognize USO's structural disadvantage. The fund's 0.6% expense ratio appears cheap, but the true cost lies in roll yield losses during contango environments, which can subtract several percentage points annually.

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