Shares of the United States Oil Fund jumped 3.12% to $162.22 on Thursday, capping a five-session streak that has added nearly $14 per unit since October 9, as a surprisingly large U.S. crude inventory decline and persistent Middle East supply fears overpowered coordinated efforts by governments to bring oil prices down. USO Surges Past $162 as Crude Stockpile Draw and Middle East Tensions Collide — But Can the Rally Hold Against a Global Push to Cool Prices?
Shares of the United States Oil Fund jumped 3.12% to $162.22 on Thursday, capping a five-session streak that has added nearly $14 per unit since October 9, as a surprisingly large U.S. crude inventory decline and persistent Middle East supply fears overpowered coordinated government efforts to bring oil prices down. For holders of USO — an exchange-traded fund that tracks the price of WTI crude oil futures — the question is whether the forces lifting prices can outlast the forces fighting them.
An Inventory Miss So Big It Moved the Market Instantly. The EIA reported an 8.56-million-barrel drawdown in U.S. crude stocks, sharply contrasting with analysts' expectations of a modest 96,000-barrel increase.
That left commercial inventories at 415.6 million barrels, roughly 3% below the five-year average. When supply shrinks faster than expected, it signals either surging demand or constrained production — both bullish for oil prices. WTI was set to rise more than 6% for the week.
Governments Are Throwing Everything at Prices — And It's Not Enough. The IEA agreed to accelerate the release of roughly 100 million barrels of emergency oil, including over 20 million barrels of diesel.
Member countries have already released approximately 330 million barrels under the March emergency action. Yet prices kept climbing. Goldman Sachs estimates there's a $24-a-barrel risk premium embedded in Brent , meaning traders believe the geopolitical danger justifies far higher valuations than fundamentals alone would support.
The Middle East Threat Isn't Theoretical — It's Getting Worse. Saudi Arabia's energy infrastructure faces a renewed wave of Houthi missile and drone strikes, including a deadly attack on Riyadh's airport on October 10 that killed at least 12 people.
The IMF warned bluntly: "Inventories are lower, spare capacity is tighter, and renewed disruption could generate much larger price adjustments."
Oil prices retreated only briefly Friday after the U.S. signaled it might ease sanctions on Russia's tanker fleet — a move that could eventually unlock supply but remains speculative.
Where That Leaves USO Holders. Absent a Middle East resolution, oil markets may experience more turmoil before any surplus emerges in 2027. The fund has ridden the crisis higher, but the rally rests on a knife's edge: a ceasefire or accelerated reserve release could erase the risk premium fast, while another shipping-lane disruption could push prices sharply higher. Investors should treat this as a geopolitical bet, not a fundamentals trade.