The United States Oil Fund (NYSE:USO) just logged the biggest trading day in its 20-year history on Monday, with an eye-popping $16 billion changing hands as retail and institutional traders piled into the oil spike and subsequent reversal.
Bloomberg ETF analyst Eric Balchunashighlighted the move with a chart showing that Monday's tally towers over every prior session in the fund's life, calling it "the peak" but adding that he thinks "we cool off from here."
Finally tally for USO was $16b of volume. Here's how that looks vs every other day of trading in its 20yr life. My guess is this is the peak, we cool off from here. But what a comeback in relevancy for this old dog. https://t.co/JFgQTN1Cnipic.twitter.com/0BTLSSt268
The surge in activity comes after USO's blistering run: the ETF was up roughly 64% year-to-date through March 9, highlighting how violently the oil complex has repriced.
The backdrop is the widening Iran war, which has turned the Strait of Hormuz—through which about a fifth of the world's oil normally flows—into a chokepoint and sent crude into panic mode.
U.S. crude also saw its largest weekly gain ever as traders shifted from pricing in mere geopolitical risk to grappling with actual disruptions to production, refining and exports across the Gulf.
That combination of fear, FOMO and macro hedging helped funnel extraordinary volumes into USO as a liquid way to play or protect against the spike.
Oil Reverses
Then came the reversal. After an initial blast that took benchmark crude above $110 and launched USO sharply higher, prices whipsawed lower as headlines hinted at diplomatic pressure and the possibility that the conflict "will end soon," prompting a rapid unwind of the most stretched longs.
USO's own tape tells the story: following a series of double‑digit percentage surges into early March, the fund dropped more than 4% on March 9 alone as traders took profits and short‑term energy hedges were pared back.
“What A Comeback”
Balchunas applauded the interest and trading volume in USO, saying, "What a comeback … for this old dog."
An ETF many left for dead after the 2020 oil crash has suddenly become a central arena for expressing views on war risk, inflation and global growth—though even its biggest fan suspects Monday's $16 billion may mark the top of this particular volume mania.
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