Different Gaps, Same Thing

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Well, everything’s green again this morning (except, mercifully, for bonds). Crude oil has been particularly strong for many months now, and I wanted to point out an interesting little tidbit.

If you glance at the ETF symbol USO, which is a very popular instrument for trading crude oil, you will see its price gap is miles and miles away:

However, USO is a pretty terrible proxy for crude oil itself (by way of example, USO is about one TENTH the price it was at its peak, and I think we all know that crude oil hasn’t dropped 90% in value). The continuous futures contract of crude is far more helpful, and the same price gap on the same date is, as you can see, much, much closer to present price levels.

As superbly as oil has been doing, I just thought I’d quietly point this out, as we are only a few percent away after having climbed so far out of the gutter.