USO borrow snaps back to zero — the June 23 loosening reversed in 48 hours

USO just pulled off its second dramatic lending reversal in two weeks. The previous note published June 24 called the borrow market "genuinely loose" at 67% availability. That has collapsed. Availability now sits at 2.1% — meaning fewer than one share remains available for every 47 already borrowed.

This reversal happened fast. On June 22, availability was 118.8%. By June 24 it had tightened to 2.5%. It is now at 2.1%, matching the tightest readings seen throughout May and early June.

The Borrow Market Has Snapped Shut Again

The June 23 loosening — flagged in the previous note as a "meaningful reset" — has fully unwound. The pattern now visible across the 30-day history is striking: USO oscillates between near-zero availability and brief windows of relative ease, then slams shut again.

Cost to borrow is 10.9% annualised. That is down from 21% in late May, but it remains elevated for an ETF. More importantly, the directional easing on CTB from prior weeks has stalled.

The ORTEX short score stands at 72.7. It has held a tight band between 72 and 73 for most of June. The brief dip to 65.1 on June 22 — the day availability was at its loosest — has fully reversed.

Short Interest Fell, But Remains Extreme

Short interest dropped 21.6% in a week to 14.9 million shares. That is a large absolute reduction. Yet it still represents 112.9% of free float. For context, that level would be extreme for any equity. For an oil ETF, it reflects deeply embedded bearish positioning built throughout June.

The one-month picture is more stable than the weekly move suggests. Short interest is up only 4% over 30 days. The bulk of the current position was established in late May, when short interest jumped from ~13.8 million to ~19.3 million shares between May 25 and May 27.

Options Traders Are Less Bearish Than the Borrow Market Implies

The put-call ratio has fallen to 1.44. The 20-day mean is 1.59. The current reading sits 2.1 standard deviations below that mean — the most bullish options positioning in at least two weeks.

This is a genuine divergence. The borrow market is pinned at near-zero availability. Short interest remains above float. Yet options traders are buying relatively fewer puts. The 52-week PCR range runs from 0.56 to 2.52, so the current reading is not extreme in absolute terms — but the direction of travel over June is clear.

What to Watch

The key question is whether the June 23–24 loosening episode was a structural shift or a brief mechanical release. The speed of the re-tightening — 118.8% to 2.1% in three days — points to the latter. USO is down 22.4% over one month, trading at $109.31.

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• Price: $109.31 (June 25), −22.4% one month
• SI % of Free Float: 112.9%, down 21.6% on the week
• Availability: 2.1% — near-zero, fully reversed from 67% on June 23
• Cost to borrow: 10.9% annualised, up 61% over one month
• PCR: 1.44, −2.1 standard deviations below 20-day mean
• ORTEX Short Score: 72.7