Historic turmoil in the oil market is proving painful for investors who just piled into a US$4.3 billion energy ETF.
The United States Oil Fund LP, or USO, plunged as much as 11 per cent to hit the lowest since its 2006 inception amid a sell-off in crude. USO’s slide came after investors plowed US$1.6 billion into the exchange-traded fund last week — the best on record.
USO is a popular choice for retail investors looking to bet on short-term price reversals, buying dips and selling rallies. However, those bets soured Monday. Crude plunged as a deadly pandemic ravaging global economies threatens to erase an entire decade of demand growth, slashing thousands of jobs and wiping out hundreds of billions of dollars from company valuations.
“Traditionally, this product is used to play mean reversion. It also attracts outsiders whenever oil is so low it makes the nightly news,” said Eric