USO has shed nearly 17% over the past month. Short sellers are covering. Yet the borrow market tells a more complicated story than a clean unwind.
Short interest has fallen sharply — down 17.5% over the past week to 119.8% of float. That is a meaningful reduction in aggregate short positioning. Cost to borrow has dropped 51% in a week to 5.2%, its lowest since late May. On the surface, the trade is unwinding in an orderly fashion.
Availability tells a different story.
Availability stands at 14.2% as of June 29. That means roughly one share remains available to borrow for every seven already lent out. That is tight — well inside the 50% threshold that signals a constrained lending market.
This is a change from the prior note, which flagged availability as low as 2.1% mid-week. The pool has eased somewhat. But the pattern across June has been consistent: brief loosening windows followed by rapid tightening. Availability hit 118.8% on June 22. It collapsed to 2.1% by June 25. It is now at 14.2%. Each "recovery" in availability has been shallower than the last.
The short score sits at 72.1 — broadly unchanged from the 72–73 band that has held for most of June. The brief dip to 65.1 on June 22 (the day availability was at its loosest) has fully reversed. Structural short pressure on this fund has not meaningfully dissipated despite the covering activity.
The put-call ratio has dropped to 1.41 — its lowest in two weeks and 1.75 standard deviations below the 20-day mean of 1.56. Calls have been gaining relative weight even as the fund slides. Over the past month, PCR has fallen steadily from 1.72 to 1.41. Options traders are not adding to bearish positions at this price level.
That stands in direct tension with the lending market picture. Short sellers still have 119.8% of float on loan. The borrow is still constrained. Yet options flow suggests incremental buyers are pushing back.
The divergence between falling CTB, covering shorts, and still-constrained availability suggests this is a partial unwind — not a capitulation. Shares being returned to the pool are being re-borrowed quickly. The borrow market is not clearing.
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