From FT Alphaville:
The USO ETF’s command of the WTI crude market has taken a breathtaking drop in the last few months. Having held close to 100,000 WTI contracts at the end of February (amounting to nearly 20 per cent of the WTI market) it has now halved to some 50,000 contracts.
So where did all that money go?
Stephen Schork of the Schork Report highlights on Monday just how much the drop-off in the USO has coincided with the build up in the US Natural Gas Fund, another ETF belonging to the same group of funds. Note the following chart:
As Schork notes, nat gas fundamentals have hardly been bullish of late. Despite this, Nymex nat gas futures, which were at multi-year lows till recently, recorded a 21.5 per cent rise in the week. This, of course, will have had a lot to do with the accompanying rally in the oil futures....MORE