USO — the United States Oil Fund — has extended its collapse to a 21% one-month loss, now trading at $111.26, and the borrow market has undergone a dramatic structural shift since last week's note: availability has swung from near-zero to genuinely loose territory.
The lending picture has changed materially since the previous note flagged the June 15–16 whipsaw. That session saw availability briefly pinned at 1.2% — every share in the pool effectively lent out — before a sharp release the following day. The move has continued: availability now stands at 67%, up from 18.6% a week ago and representing the most relaxed borrow conditions USO has seen in months. For context, this fund spent the better part of May with availability pinned between 0% and 5%, and touched the 52-week floor of 0% on multiple occasions. The reset is meaningful. Cost to borrow has followed the same direction, falling to 9.1% annualised from 12.8% a week ago and well below the 21% peak hit in late May. That's still a non-trivial carry cost on an ETF short, but the trend is clearly easing. Short interest itself pulled back about 5% on the week to around 18.2 million shares — still an extraordinary 138% of float, reflecting the mechanics of an ETF where authorised participants routinely run positions above 100% of float rather than signalling a genuine bearish crowding trade in the conventional equity sense.
Options positioning reinforces the cautious but not panicked tone. The put/call ratio is running at 1.51, slightly below its 20-day average of 1.61 — roughly 1.6 standard deviations below that mean. For an oil fund that has seen persistent put-buying through the drawdown, this modest easing in relative downside protection demand is worth noting. The PCR has been grinding lower from the 1.72 reading seen in early June, even as the fund has continued to fall, suggesting options traders are not adding materially to the bear case at current levels. The 52-week range of 0.56 to 2.52 puts the current reading squarely in the middle of the distribution — neither complacent nor extreme.
The ORTEX short score of 71.9 places USO in elevated territory, though it has dipped slightly from the 73-handle it held for most of the past two weeks. The June 22 reading briefly pulled back to 65, before recovering — a one-day anomaly that coincided with the availability figure also jumping sharply to 119% that day, before both normalised the following session. That June 22 spike in availability and dip in short score now looks like a momentary re-lending event rather than a structural shift; the system has largely re-converged.
The institutional holder base is dominated by dealers and trading houses rather than directional investors — Goldman Sachs held 52% of disclosed shares as of March 31, Morgan Stanley 17%, with Jane Street and Citadel also on the sheet. This is characteristic of an ETF where most institutional ownership is creation/redemption activity or hedging rather than a view on crude. The insider data is from 2006 and entirely irrelevant to the current setup.
The next leg of the story turns on whether the availability loosening represents a genuine reduction in short demand — some bears covering after a 21% decline — or simply a mechanical increase in lending supply as the fund's authorised participants adjust. The cost-to-borrow trend and the modest PCR compression both point toward the former, but availability has snapped back violently before in this name, and the short score remaining near 72 suggests positioning has not yet cleared.
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