USO Hits $20+! More Oil Price Gains Coming or Not?
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Today we discuss USO oil ETF. USO has been hot an no there is no such thing as USO stock… The 2 mains things we will talk about today is the fact that oil prices keep going up and we will chat about if OIL prices will continue to go up and if USO will continue to go up. Enjoy! Let me know your opinion on USO in the comments section.
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Well Holy smoke is is a no joke is check out us Oh here today guys oh my goodness us Oh is hot on top a hot look at it Okay, it’s over 20 bucks, it’s now over $21 trading at $21.54 here today up another nine and a half percent $1.87 in the positive move.
This is massive Okay, I’ve been very fortunate I got in uso almost at the exact bottom. And so far we are doing very, very well on you. So we’re about $2,941 as of right now up 26 and a half percent. And I’m just thinking, why didn’t I put more money in I remember I’ve made that video, I might put 100k in uso well, and then I only put like 11,000 or whatever.
And now I’m looking at this and I’m regretting it. I’m like, why didn’t I put more because think about it. If I would have put, you know, let’s say $100,000 in this being up 26% that would mean I had a $26,000 gain 26,000 like I could sell out today with $26,000.
If I put 100k in it instead of 11k. And take into account like I bought this a week ago. I bought this on April 28. It’s May fifth today, imagine that I could just made $26,000 in a matter of one week. I mean, absolutely extraordinary. But hey, you know, I can’t complain, you know, obviously, I took way less risk in it.
And you know, we’re still doing great. I mean up almost $3,000 as of right now I shouldn’t really complain. It’s just you know, when you think about putting a certain number in something, and then it goes up a ton. And you didn’t put that number in it.
Obviously in a situation like that. It’s like Oh, one more. So we’re going to talk about us out here today I want to talk about two things in specific Okay. One is what is going great for us Oh, right now there’s something very specific we got to talk about that is going very well for you.
So right now, the second thing we got to talk about is will oil prices keep going higher. There’s so much debate on what’s going on with the price of oil. Is it going to you know, drop again, is it likely to continue to climb throughout summer? What is going on there?
So we’ll talk about the realistic possibilities. Now last time I came out with a US Oh video and got 8200 thumbs up that’s gonna be a very hard number for us to beat in this video. But I think we have a shot guys. I think we have a shot. Let’s be at 200 thumbs up by tonight.
I think we can do it. Okay. Alright guys, let’s start getting into this. And by the way, leave me a comment on what your opinion is on uso down in that comment section or just oil prices in general. I’d love to hear from you guys. Okay, so just for the you know, a few people that are probably watching this video like what the heck is a uso? Is that an oil stock?
What exactly it is I know a lot of you guys probably know what uso is by now. Some people don’t it real simple, okay, they buy oil futures contracts. It’s an ETF they buy oil futures contracts. And they basically try to track the price of oil.
So if oil goes up you know certain percentage a hopefully us Oh, it goes up just as much. But on the flip side, if oil prices go down a bunch something like uso would get hurt severely. Okay, so basically they’re trying their best to track the price of oil oil goes up, this goes up, oil goes down, this goes down. Okay, that’s basically what u s. o does. Okay.
Now uso had been in a very tough spot. This is a three month chart for uso in on a split adjusted basis. uso went from $90 Plus, to you know, it was trading at the lows at like, $16.88. Okay, that’s where it was trading at the lows a little under 17 bucks.
And that’s in a three month span. That chart is ugly on ugly. I mean, that’s extraordinary, right. And a lot of people got tore up in uso during that time. A lot of people got into it one month ago, two months ago, and some three months ago. And they just got shredded.
Like simply like they lost a lot, a lot, a lot of money. And it wasn’t just like retail investors, there was a lot of institutions in uso and as oil as they continue to drop and drop and drop. People just got, you know, completely destroyed in us.
So up until very recently, and unfortunate I got in literally almost absolute lows, the lows it hit was like, you know, just under 17 bucks. 1688 in our cost basis is on a split adjusted basis is $17.04. So I gotta say, I’m very fortunate, I wish I could say I’m the smartest genius in the world. But believe me, there’s very few times that I get stocks or a commodity related thing like this, obviously, and I don’t play commodities that often.
But it’s very rare. I get, you know, almost at the bottom, I can just tell you guys that okay, I wish this happened all the time. But for every one of these scenarios where I get it, like right at the bottom is 10 scenarios where I don’t get at the bottom.
So usually when I go into something, I usually plan on going down more. I’m like I buy in today, you know, over the next few days, few weeks or maybe a few months, it’s probably gonna go down more I’ll get to buy more at a cheaper price, obviously with you so it’s just been up in our way and it is what it is okay, but what basically happened that’s so massive for us. Oh, and people just didn’t even pay attention to this.
He just brushed it off. Like it was like, oh, there was like nothing. And I’m like there was a massive change that happened the day before. I bought USL April 27, a massive change was announced. Okay. Basically the change was before they used to just own a ton of contracts in the upcoming month, and then that following month, and that was it.
But the massive change was the fun started doing a breakdown of this 30% of the money in July contracts 15% of their money in August contracts 15% of their money in September contracts 15% of their money in October contracts, and 15% of the money in December contracts with 10% being in June 2021 contracts. This was a massive change. People did not respect this.
When I say people, I mean investors, people that knew a lot will just kind of take disrespect to this. I think it’s just because you know what, if something’s going bad, would you sob that had gone so bad, people just want to pile on and attack it. And they don’t care if there’s been any type of change with it. They just they just throw it off to the side. And it’s I’ve just seen it.
No, it’s not just like this happens in investments. This happens with anything. When it’s going bad. The communities love to just attack it more and more. And even if there’s a change their investors or people in general, they just don’t care. And it’s a massive mistake. Okay? The fact is, the fundamentals of uso changed in a massive way on April 27, in a massive, massive way.
It took us from a scenario where it was all about just that that current month in the upcoming month to now they’re they’re spreading their money across the entire year. And they weren’t going nearly as heavy on some of these contracts like they were before where they had to sell all these contracts out right at the lows or something like that.
It was a real ugly situation for you. So the fact was the fundamentals change. And honestly, this happens with stocks all the time, okay? uso is not a stock, but I can tell you being somebody that you know, 99% of my investments is in what stocks right? So when I buy stocks is fundamental changes all the time.
And if you brush those off, and you don’t give respect to those, you are just making a massive, massive mistake. Okay? For instance, there’s one guy, his name was Steve Jobs, right? He comes out with this iPhone, a lot of people laughed at this thing, okay. But the fact is, the day iPhone came out, in the day that started getting some real sales was just really like 2008 is when it started getting real sales.
Although it was shown off in 2007, people should have recognized and respected the fact that the fundamental story in Apple had changed. This was no longer just an iPod, and very niche like computer company anymore. It just wasn’t the fundamentals were changing. And some people brush those off, they laughed at him, while others recognize do something big as changed here, if other people don’t want it, and that’s fine.
If other people want to laugh at this fine if people want to laugh at a $500 phone, laugh at it. Okay, the fundamental story in Apple had changed that day, okay, the day, the model three came out for Tesla. That was the day the fundamental story had changed for Tesla, in my opinion, is, that was the day for me, where I said, Oh my gosh, this is a company that’s gonna, you know, be a be a huge company.
I didn’t invest in it that particular day, but I recognize that it was like, you know, something fundamental has changed there. Because this is going to go from a company as a very nice automaker to a company that is likely going to be a threat to every automaker out there in the world.
And I just made that change in my head. And I was like, the fundamental story has fundamentally changed here, okay. And the fact is, you must respect fundamental changes in any asset. And we had a fundamental change in us. So in a lot of people, a lot of investors brushed it off, they didn’t respect it.
The fact was the whole way uso is being done, changed massively on April 27. And as long as you know, oil prices continue to go up, it’s going to be a very, very, very good thing for us. Okay, another huge mistake I see from a lot not just uso, but a lot of assets in general, you must never judge an asset on past price performance.
So many people want to look at uso and they they pull up a chart, a three month chart, a six month chart, look at we’re looking at six month chart right now, look at that it was above $100 on a split adjusted basis, right. And then it goes all the way down to 16. At at this lows, and people are looking at that. And they’re just judging like uso is going to be down there forever.
And uso is done. And just uso is crap and just pile on and attack uso and attack uso. And it’s like, Guys, you know, just because an asset has performed poorly in the past does not mean it will continue to do that. Believe me, I have seen countless stocks over time in the stock market that were great stocks and then went on to be horrible stocks for ever, or you know, a long time.
Let’s put it that way. Right. Remember, you know, let’s talk about you know, a company like Fitbit, right? Fitbit goes IPO the stock goes up and up and up and it’s just a hot stock. Okay, Fitbit continues to go down and down and down for years to go in the future. And that stock was probably on its way to zero before Google bought them out.
I don’t know what Google bought them at $6 a share whatever the stock used to be $50 plus right here on the flip side of seeing it the other way for instance, Tesla stock right we always talk a lot about Tesla stock on the channel. Look at Tesla stock p I remember hearing from a lot of people when especially when I started investing in the stock like I don’t know There’s probably like, a year and a half ago, two years ago or something like that, right?
People like oh, Tesla stock hasn’t done anything years. And you they kind of point towards the stock was basically at a 200 to $350 range for five years. Okay, five years it was in this range and it just bounced around like late pull up the stock chart and you’ll see the exact thing I remember last year was it was trading at $180.
And people you know, the short sellers or trolls or whatever, they’re like, Oh, you stupid, you know, Tesla shareholders. You guys don’t know what you’re doing. Tesla stock is lower here today than it was four and a half years ago or whatever they would say stuff like that.
It was the truth. It was the truth. Okay, they weren’t like making it up. But the fact is, you can’t judge based upon past performance. Because guess what ended up happening to test the stock after that, you know, we all know the story that right?
So never make that huge mistake in the stock market or commodities market, whatever you’re looking at just judge something off of what it’s done in the past, because it honestly doesn’t really tell you much. I’ll be completely honest, I don’t really you know, it might be fun to look at a stock chart of what’s done over the past five years or three years.
It doesn’t really mean much in the end. You know, I’ve seen it go either way. I’ve seen great stocks become crap stocks, I’ve seen crap stocks become great stocks, I’ve seen stocks that do nothing, continue to do nothing or, you know, do great things or do bad things.
It’s just, you know, you got to judge our fundamentals at the end of the day. Okay. What is going on? That is so super exciting for us. So, so these are the contracts that us Oh now owns, okay, and this is where the majority of their money is.
Now, okay, they’re in July contracts that which are at $22.78. That’s what they bought at the market value of that it’s over $775 million. That’s the majority of their contracts. The next four positions are massive for them as well, December 20. Contracts 2908.
That’s makes up $516 million. Were the contracts there. August 2020 contracts, that makes up $526 million. That’s at a price of 2463. They bought those at October 28 $27.20. They bought $524 million of that one September 2020 $26.08. They paid for those that’s over a half a billion dollars there.
Okay, June 2021. That’s, that’s still a big one for them. Okay, they bought those ones at 3221. And that represents about $350 million. And the last big contract they have, that’s a lot of money’s invested into 227 million in July 20 contracts as well.
But these are ice ones, and that’s at a price of $22.78. But let’s go ahead and put these side by side and let’s look at the numbers. This is where things get extraordinary. Okay. So on the left hand side, we have current prices. That’s what these contracts are trading at right now.
Who are the CME Group calm, okay. And then on the right hand side, that’s what basically uso bought these applicator fun. So 2278, they paid for the July 20 contracts, July 2020, train net 2655 rain now, when they go to sell those, they’re going to sell for a massive profit likely Okay, as they start to roll those over over time.
I mean, it’s just a lot higher, nevermind if oil continues to go higher and higher. I mean, it’s just it’s very, very attractive. Let’s go ahead and look at the next contracts down for us. So the next biggest position, their next biggest position is in December of 2020.
Right, they pay $29.08. For those, let’s go over to the you know, basically the the what the current price is $31.67 is the current price there. If we look at August 20, that’s their third biggest position 2463 they paid for those August 2020s trade net 2815 right now, and they talk about a ridiculously massive profit, especially when you talk about how big these numbers are, in terms of these contracts.
Right? October 2020. They bought them at 2720. Right now, those are trading at $30.17 a train over 30 bucks right now. Okay, next biggest contracts down September 2020 2608 is what uso paid. Those are trading right now at 2932 that’s over a $3 profit per contract right now guys, okay, and then we go ahead and look at the last two big contracts.
The one is June 2021 3221. They paid for those those are trading at 3411 right now and we’ll definitely see some big change in that as we get closer and closer that day down the road. And then if we go ahead and look at the other July 2020s once again 2278 right now it’s trading at 2655 so almost a $4 difference there so you know when you just look at those contracts things are going very very well for you so.
They’re big time in the money on these contracts already nevermind if you know oil continues to go up. Now something else keep an account. I mean oil is up like 20% today it is a great day for oil it although uso does not have any more June contracts, just the fact that the June contracts moving huge is just moving up the entire market.
Okay, so this is phenomenal. Now the next question people are going to ask is will oil keep going up? Is this sustainable is always going to drop back down? How realistic is it for oil to drop back down again? No in terms of oil supply right now, obviously, there’s a ridiculous amount of supply of oil in the market.
Right. That’s why, you know, a lot of people are paying through the roof just to store oil right now, that is something we do know. Okay. And what we also know is demand is very low right now, why is this because of Roni? Rona, that’s obviously shut down the economy.
And when you shut down most of the economy, right, guess what’s not gonna happen? A whole lot of use of oil products. Okay. So that’s what we know. That’s what we know that is going on at the moment. And what we also know is everybody’s cutting oil production right now.
Okay, so right, basically, this keep this in mind, this is something very important, right? Oil right now, is trading in a range, if you look at all these different contracts have pretty much $24 to $33. And that’s if you even go out like a year from now, which for context on that is insanely low, like oil price is usually considered very low.
If it’s in the 40 to $60 range, that’s usually considered low oil. This is this is like, you know, even though oil has come back quite a bit over the past week or so, this is still ridiculously low prices. Okay? If you look at any historical standard in recent times, this is these are still ridiculously low prices.
Keep in mind oil this time of year, you could have probably, you know, predicted that, you know, assuming there was going to be no Roni rownum oil would probably be trading between $90 and $110. For the contracts right now, if Roni Roni literally never happened.
$90 to $110, is probably where oil would be right now. Obviously, Ronnie run happened, right? And so that’s created this ridiculously low pricing, because there’s just not that much demand. And then you have all these guys fighting. But here’s where things are getting interesting.
Okay, the Saudis and in Middle East in general, right, we know that the Saudis can basically, you know, get oil out of the ground, get it transported. And basically the breakeven, somewhere around $10 a barrel, roughly, right, Middle East, in general, more expensive, but still usually, like around $20, or under $20.
So that’s still good for the Middle East, they can at least break even or make a you know, sleep profit, if oil prices stay in this range of, you know, 20 to $30. But the problem is, a lot of those countries budgets are very dependent upon oil profits, okay, so these types of countries are really making a lot of money when oil goes to $60 $80 $100.
Plus, that’s when the money starts rolling in. Okay. And that’s when things are very amazing. Russia, you know, you’re probably looking at, you know, for them, $30 plus, is really what they need for break even. And then they’re, they’re making a lot of money if oil goes to 5060 7080 $100 a barrel.
So what we know is the Saudis and Middle East and in general and Russia, you know, OPEC, if you want to call them that, now, they’re starting to continue to cut production and cut production, because they just recognize that men, you know, this is great, because it’s hurting the US at all the US producers, a lot of these guys in the shale plays or whatnot, are gonna go out of business, and the US oil industry is just going to be hurt massively for quite a while.
And when oil prices do come back, if they do come back to 6080 $100, a barrel, again, which the US producers will make profits at that keep in mind, it might be very hard to get loans, if you want to do oil wells, basically, in United States of America.
Because a lot of banks are going to have to have massive defaults on you know, all these us producers, or a lot of these us producers that have been drilling out in the shale and whatnot, that have taken on massive debts, massive bank loans, you know, a ton of money from investors, right, a lot of them are going to go under.
And so even when oil prices come back, a lot of investors or banks weren’t going to want to loan money to the next company go out and drill in the shales, because they’re gonna look at it as No, I don’t want to get into that same situation again, and all sudden, oil prices are 2030 bucks, maybe 40 bucks again, you guys go bankrupt, and we lose all our money as investors, right?
So it’s gonna get to a real interesting place where these guys are continue to cut production. Meanwhile, economies are starting back up a little bit, okay, and they’ll continue to start back up, which means essentially, the use of oil is going to start going up, right?
And we could in very short order, assuming you know, these guys keep production down for the next, you know, we need a production down for at least six to 12 months if these guys can agree to keep production very low, and get through all this supply in the oil market over the next 612 months.
And they don’t have production. You know, you could be looking at you know, oil rates skyrocketing and all sudden, you know, this new this time next year, I mean, think about this guys, at this time next year, assuming oil prices double right.
That would still only put oil in a range of what $48 to $66 at this time next year, and that’s assuming these presses double with oil prices doubling is usually like a big thing like holy smokes. I can’t imagine oil prices doubling by next year right?
It would still be incredibly low like 48 if if oil next summer is in the $48 260 $6 range that is still extremely low. Let’s be very clear about that. That’s still extremely low. If oil prices in the summer ask those prices, guys. So in my opinion, you know, how do I know if oil prices are gonna go up every day, every week, every month?
No. But what I do, what I am very confident about is that these prices of $20 $30 range are not sustainable. And over the course of the next one to two years, in my opinion, these prices are going to likely go up a time. Once again, I don’t know if it’s going to happen every day, every week, every month.
But I’m very confident well, prices are not going to be stuck in 20 to $30 range, it just doesn’t make sense, these guys will just be happy to continue to cut production and watch those prices rise, then they’ll slowly start bringing up production prices will likely still stay high, as long as they don’t bring it up too much.
And, you know, obviously the profits will start to pour in these guys, especially if oil goes back to 6080 $100 a barrel, which is very realistic, once the economy gets back strong again, which we will see when that happens. We don’t know if it’s gonna be a year from now, two years from now, three years from now, four years from now.
But you know, at some point things will get back to normal at some point, you know, massive amounts of oil is going to be used out there in the markets again, and you know, it’ll be a glorious day once again for the oil producers. Meanwhile, the US players will have likely most of them gone bankrupt.
So if you guys enjoyed today’s video, as always make sure to smash that thumbs up button if you did and leave me a comment down there and where you think we’ll be going over the next one to two years. I would love to hear from you guys. As always, thank you for watching and have a great day.