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Biggest Oil ETF Could Go ‘Lights Out,’ Warns Wall Street Strategist

  • June WTI below zero could devastate USO, Nomura warns
  • No level of losses will require USO to close: prospectus
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Why Oil Suffered Its Worst Day

The blowup of leveraged exchange-traded products is old hat by now.

But the recent price action in West Texas Intermediate raises the prospect of the unthinkable: A relatively plain-vanilla fund that offers investors exposure to fluctuations in crude prices might be worth less than nothing.

The $4.1 billion United States Oil Fund LP (ticker USO) slumped about 11% to a record low on Monday as the front-month West Texas Intermediate contract made an unpredecented drop below zero, throwing into sharp relief the dearth of demand and storage capacity for the commodity stateside. The ETF tumbled 32% to 12:44 p.m. in New York Tuesday.