For anyone hoping for some relief from the ongoing pain at the pump, it’s looking like a forlorn hope thanks to the Israel-Hamas war and the geopolitical fallout therein. Crude prices managed to hit their highest levels since about two weeks ago, and it’s not looking like it’s coming down any time soon. The United States Oil Fund LP (NYSEARCA:USO) added nearly 1.5% in Wednesday’s trading on the news.
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First, the box scores: crude inventories plunged, down 4.5 million barrels against a gain of 10.2 million barrels last week. Analyst consensus looked for a decline of just 0.3 million barrels. Gasoline inventories, meanwhile, slipped better than double what was expected, down 2.4 million barrels against the 1.097 million barrels expected by analyst consensus. Distillates also saw an open decline, dropping 3.2 million barrels versus the 1.36 million expected.
What’s going on? Well, the ongoing Israel-Hamas war is certainly making an issue of things, particularly as a hospital in Gaza City was hit by fire from some direction, which resulted in the death of hundreds. As each side blames the other, the whole affair prompted Iran to call for a complete oil embargo against Israel. Meanwhile, tightening crude supplies in the U.S. also contributed to rising prices abroad.
Is USO a Good Investment?
Turning to Wall Street, a look at the last five days in trading for the USO ETF shows a somewhat erratic trend line. Gains in the early part followed losses in the middle part, followed by a steady upward climb in Tuesday’s trading that accelerated going into Wednesday.
