United States 12 Month Oil Fund,

USL

Market cap $39.9M

Crude oil outlook turns cautious as oversupply risks persist. Track USO, DBO & USL for potential opportunities amid geopolitical jitters.

Global oil production has reached unprecedented levels, creating a widening gap between supply and demand. Non-OPEC+ countries, particularly those in the Americas, drive most expansion.

Crude oil was down 4% Sunday night, as OPEC once again announced a production increase, a move by OPEC that will eventually help US inflation, and give the Fed another reason to lower the fed funds rate. The 10-year annual return on the TLT is still negative, and has been for a year or so.

Oil prices regain momentum at the start of 2025 due to colder weather, falling U.S. stockpiles and additional sanctions on Russia's oil sector.

Oil ETFs gained about 4% last week. However, the outlook for 2025 does not appear too bullish.

Tensions in the Middle East escalated on Wednesday following an Iranian missile attack on Israel, sparking demand for safe-haven assets as investors grew anxious about the potential expansion of the conflict.

In the latest meeting, OPEC+ agreed to extend production cuts of 3.66 million barrels per day (bpd) until the end of 2025, along with prolonging cuts of 2.2 million bpd until September 2024.

Slowing manufacturing activity may instigate the Fed to cut interest rates earlier-than-expected. While this is a plus for oil ETFs, the U.S. government's efforts to keep oil prices low in the election year may not allow those ETFs to soar ahead.

Oil prices surged recently to their highest levels since October as investors closely monitored escalating geopolitical tensions in key regions. The improved demand outlook is another reason for which oil prices can go higher.

Oil prices have been in great shape this year. If the Gaza truce takes time to materialize, the rally could prolong.