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USO has reversed the brief lull in short pressure documented last week: short interest has dropped sharply in share terms, yet the lending market has locked down again, creating a tighter squeeze setup than at any point in the past fortnight.
The most significant shift is in the borrow market, and it happened fast. Availability collapsed from 56% on October 12 to just 1.5% on October 13, meaning there is now barely one share left to borrow for every 66 already lent out. That is back to the near-zero conditions seen on October 2 and September 30, when the lending pool was effectively exhausted. Cost to borrow has moved in the opposite direction to what you might expect given the tightness: it has fallen to 3.57%, down 25% on the week and well off the September highs above 36%. That divergence is unusual and worth watching. When availability is this constrained, a cost-to-borrow spike tends to follow with a lag rather than precede it.
Short interest itself tells a more complicated story. In share terms, positions dropped nearly 19% on the week to around 10.2 million shares, a material reduction from the 12.6 million peak in early October. As a percentage of free float, however, short interest remains at 77%, still among the most heavily shorted instruments in the ETF universe. The ORTEX short score has eased from the 71 range that held for most of the past two weeks to 69.7, a modest retreat but still firmly in bearish territory. The picture is one of some bears closing out but a large residual position remaining in a lending market that has just slammed shut again.
Options positioning has been remarkably stable throughout the turbulence, which is itself notable. The put/call ratio is running at 1.58, essentially flat on the week and almost precisely at its 20-day average of 1.55. The 52-week range runs from 0.56 to 2.52, so the current reading is neither hedged nor complacent; it simply reflects a persistent structural preference for puts in an instrument that is frequently used for bearish oil exposure. The z-score of 0.66 confirms there is no unusual options activity layered on top of the short positioning story right now.
The fund's price has moved in a direction that complicates the bear case. USO closed at $153.09 on October 13, up 5.6% on the week and 1.4% on the day. That gain comes after a month in which the fund slipped 1.2%, so the weekly bounce is meaningful but has not yet broken the broader sideways-to-lower trend. The institutional register, reported as of June 30, shows Goldman Sachs holding 45% of shares and Morgan Stanley a further 22%, positions that reflect the mechanics of how large dealers warehouse ETF creation units rather than directional conviction on crude prices.
What to watch next is whether cost to borrow catches up with the tightness in availability. The September pattern, when borrow costs briefly spiked above 36% as availability hit zero, suggests the current gap between a near-empty lending pool and a still-modest 3.57% cost may not persist.
See the live data behind this article on ORTEX.
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