So, would the Beverly Hillbillies been able to build a cement pond with crude at $40? Miss Hathaway would have to run the numbers. USO hit another all-time low yesterday, which it also did a couple weeks ago when I wrote about the basis in the /CL futures dragging USO down. The Sep/Oct basis then was about .40. Now that USO is holding mostly Oct /CL futures, it’s going to have to roll them to Nov. And the Oct/Nov basis is trading at .90, which would make the drag on USO worse. While the basis could narrow and reduce the drag on USO, the pressure on /CL would likely keep the front month lower and the basis wide. That’s why I’ll be adding a few more long put spreads to my USO position as a defined-risk way to ride the drag lower.
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