Understand any stock in simple English
Enter a ticker to learn what the company does and how it makes money.
It lets ordinary investors bet on the price of oil without buying barrels of crude.
The United States Oil Fund is not really a company in the usual sense. It does not drill for oil, sell gasoline, or own tankers full of crude. It is a fund, a big pool of investors' money, and its only job is to roughly follow the price of oil. When you buy a share, you are buying a small slice of a portfolio made almost entirely of oil futures contracts — agreements to buy crude at a set price on a future date. Your money goes in, the fund buys those contracts, and if oil gets more expensive, your slice tends to be worth more. If oil gets cheaper, your slice shrinks. The people who pay for this are ordinary investors, traders, and financial advisors who want oil exposure inside a regular brokerage account, without the hassle of the actual physical oil market.
Here is the catch that trips up a lot of people. The fund does not hold oil. It holds futures contracts that it must keep rolling — selling the ones about to expire and buying new ones for later months. Think of it like paying rent on an apartment you never actually live in, and every month the rent changes. When later-dated oil costs more than near-dated oil, that roll costs money, and the fund quietly bleeds value even if the headline oil price stays flat. That is why this fund is built for short-term trading, not for buy-and-hold investors. Its shares trade on NYSE Arca under the ticker USO, and it is structured as a limited partnership, which means it sends investors a K-1 tax form each year instead of the usual 1099. The fund is managed by United States Commodity Funds, based in California.
A few big turning points shaped what this fund is today. It launched in 2006 as one of the first easy ways for regular people to trade oil. In April 2020, when oil prices briefly went negative during the pandemic crash, the fund got hammered and had to scramble — regulators later fined its parent company, and the fund had to change its rules to spread its bets across more months. That episode is why the fund you see now looks more cautious than the swashbuckling one from a few years ago. It is not a business that earns profits from customers; it charges a small management fee, taken out of the fund's assets, and that fee is essentially its revenue. Nobody pays it a subscription.
Saved answer · last researched 11 Oct 2026