BOSTON  – The United States Oil Fund(USO), the share price of which has been crushed this month by big bets on front-month oil contracts, revealed on Tuesday that it was sitting on more than $700 million in unrealized losses heading into April.

U.S. Oil Fund sitting on $726 million in unrealized losses before April- oil and gas 360

Source: Reuters

The $3 billion exchange-traded product booked actual realized losses of $466.4 million during March, the fund disclosed in a filing with the U.S. Securities and Exchange Commission. But at the end of March, the fund was also sitting on $725.5 million in unrealized losses from its bets on oil futures contracts, the disclosure said.

The fund is now recasting its investment strategy after mammoth losses when May oil futures traded below $0 a barrel for the first time ever last week. The fund continues to lose money as short-sellers heap even more pressure on its positions.

It will exit its position in the front-month June crude oil futures contract and may need to hold more cash to satisfy potential margin requirements. USO has been scrambling to diversify its holdings into later-dated contracts from the most heavily traded front-month contract.

The fund’s year-to-date return is -83%, but it has attracted $3.2 billion in net deposits this month from investors betting on a rebound in the oil market.



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