USO enters the final day of September with short interest at its most extreme reading in months, a lending market locked almost completely shut, and crude exposure dropping nearly 4.5% in a single session.
The short positioning story has become structurally extreme. Short interest has climbed to 96.6% of the free float, up 30% on the week from roughly 9.8 million shares to 12.8 million. That is the highest level in the 30-day history window and well above the mid-August peak near 14 million shares that preceded a sharp unwind. The ORTEX short score has edged up to 71.2, its highest reading of the past fortnight, confirming that bearish structural pressure has not just rebuilt but intensified since the September 23 note documented the original rebuild. What was described then as bears "rebuilding, not retreating" has since become bears doubling down.
The lending market has followed the positioning deeper into constraint. Availability collapsed to 2.75% on September 29, down from 67% just one day earlier on September 28, which itself was an anomalous loosening from the near-zero conditions that prevailed most of the prior week. For context: availability at 2.75% means there is roughly one share available to borrow for every 36 already lent out. The last time availability hit zero entirely was September 8, the peak of the earlier squeeze episode, and September 22 also recorded 0.82%. The borrow market is back in that territory. The cost to borrow has settled at 6.98% after spiking as high as 52.9% in early September when the lending pool was truly exhausted. That prior peak matters: current borrowing costs are elevated relative to August's 2-3% range but are nowhere near the extreme seen three weeks ago, suggesting the market is pricing in tight supply without yet pricing in a full squeeze premium.
Options traders are adding a further cautious overlay. The put/call ratio has climbed to 1.60, above its 20-day average of 1.43. That is modestly elevated rather than extreme, about 1.2 standard deviations above the mean, and well below the 52-week high of 2.52. The pattern over September has been a steady drift higher in the PCR from around 1.20 in early September to 1.60 now, tracking the rebuilding of short interest week by week. Options positioning reinforces rather than contradicts the directional lean in the lending market.
Goldman Sachs remains the dominant institutional holder with 45% of reported shares, followed by Morgan Stanley at 21.6%. The combined Wall Street broker-dealer presence accounts for the majority of reported institutional holdings, a pattern typical for an oil ETF used heavily for hedging and structured products. More telling on the activity side is HRT Financial, a quantitative market-maker with 10% owner status, which filed a cluster of trades on September 14 to 16 showing gross purchases of around 46,000 shares against gross sales of roughly 17,000 shares. The net over 90 days across all filers is a positive 53,480 shares with a net dollar value of $8.6 million. These are mechanistic flows from a market-maker rather than a directional conviction trade, but they confirm the fund remains actively traded by large participants even as price fell to $143.35, down another 4.4% on September 29 alone.
The setup heading into October is one where the structure of bearish positioning in USO has rarely been tighter: short interest near a 30-day high, availability almost fully used, and a cost to borrow that could spike quickly if the pool tightens further. What to watch is whether the borrow rate begins to move toward the September 8 levels again or whether any price recovery in crude prompts a second covering wave like the one that briefly loosened availability to 108% on September 25 before collapsing back within days.
See the live data behind this article on ORTEX.
Open USO on ORTEX →ORTEX Market Intelligence content is generated by AI from a snapshot of ORTEX's proprietary data. Content is informational only and does not constitute investment advice.
