USO has gained 4.5% on the week to $108.70, but the short-covering story that dominated the previous note has hit a pause — and the options market is now telling a meaningfully different story about where sentiment is heading.
The most notable shift this week is in options positioning. Put/call ratio has dropped to 1.19, nearly two standard deviations below its 20-day average of 1.42 — the most bullish options reading in months. For context, the PCR ran above 1.60 through most of June, when oil was sliding and bears controlled the narrative. That ratio has now compressed steadily for three straight weeks, suggesting traders are adding calls and trimming downside hedges as crude finds its footing. The 52-week PCR range sits between 0.56 and 2.52, so at 1.19 the options market is positioned modestly bullish relative to history — not extreme, but a clear directional shift from the June defensive peak.
The short covering story has stalled, which is itself worth flagging. Short interest nudged back up 5.9% on July 9 alone, now reading 108% of float — still historically elevated, but having stopped its descent from a peak near 130% in mid-June. The month-on-month decline remains steep at 22%, so the larger unwind trend is intact. But the intra-week data shows shorts adding back positions even as the price bounced, which contrasts with the clean covering pattern from the previous two weeks. The ORTEX short score sits at 67, elevated but down from the 72 range that prevailed in late June — consistent with a position that remains heavy but no longer tightening.
The borrow market has loosened considerably compared to June's emergency conditions, though it has tightened again on a week-over-week basis. Availability now reads 151% — meaning roughly 1.5 shares remain available to borrow for every one already lent out. That compares to 286% just days ago, and to near-zero readings on multiple days in late June when the lending pool was essentially exhausted. Cost to borrow has continued its descent, now at 5.1% — down 27% on the week and more than 60% below the 14-15% levels that prevailed in early June. The borrow is cheaper and more accessible than at any point in the past six weeks, even after this week's tightening.
Institutional ownership data (as of March 31) shows Goldman Sachs holding roughly 52% of reported shares, with Morgan Stanley at 17% and Brevan Howard adding a fresh 1.4 million shares that quarter. Those are largely trading and market-making positions rather than directional views, but the concentration is a reminder that flow dynamics in USO can be dominated by a small number of large desks. The insider data in the snapshot is over 20 years old and carries no weight here.
The key tension to watch is whether the resumption of short-side adding on July 9 represents opportunistic repositioning against the price bounce, or the start of a new accumulation phase — the next move in crude oil prices will likely resolve that question.
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