Shares of the United States Oil Fund LP (NYSE:USO) surged to a new 52-week high Tuesday afternoon, tracking a sharp rally in benchmark crude futures as physical supply disruptions in the Middle East and tightening product markets heightened global supply concerns.
- United States Oil Fund stock is challenging resistance. Why did USO hit a new high?
Saudi Aramco Cargo Cancellations and Pipeline Closure Squeeze European Supply
The upside momentum in energy markets followed reports that state-owned Saudi Aramco deferred and canceled several September crude cargoes intended for European refiners.
The operational disruptions stem from the closure of Saudi Arabia’s East-West pipeline to the Red Sea, restricting logistics and forcing refiners to seek alternative prompt supply in an already tight spot market.
Because USO directly tracks front-month crude oil futures, immediate reductions in physical supply force refiners to aggressively bid up prompt-delivery contracts to secure replacement inventory.
This sudden tightening of available global supply inflates underlying futures pricing, directly boosting the exchange-traded fund’s net asset value and driving share prices higher.
With Brent crude above $108 per barrel, rising energy costs reinforce inflation risks ahead of Wednesday’s Federal Reserve interest rate decision.
USO Shares Climb Tuesday Afternoon
USO Price Action: United States Oil Fund shares were up 3.72% at $162.49 at the time of publication on Tuesday. The stock is trading at a new 52-week high, according to Benzinga Pro data.
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