Disclaimer: This post contains references to products from one or more of our advertisers. We may receive compensation (at no cost to you) when you click on links to those products. Read our Disclaimer Policy for more information.
Best Crude Oil ETFs
Crude Oil ETFs are futures-based commodity funds that attempt to track the daily spot price of crude oil. They allow you to gain exposure to crude oil without needing a futures trading account.
Generally speaking, the fund managers perpetually roll over the futures contracts in these ETFs, meaning you won’t ever take delivery of the barrels of oil.
But without further delay, here are the best crude oil ETFs:
- United States Oil Fund LP (USO)
- ProShares Ultra Bloomberg Crude Oil ETF (UCO)
- United States 12 Month Oil Fund LP (USL)
- ProShares K-1 Free Crude Oil Strategy ETF (OILK)
Except for OILK, these ETFs are organized as partnerships, and therefore ownership in them makes you a limited partner. This requires you to file a K-1 tax form annually.
Next, we’ll analyze each of them individually.
#1. United States Oil Fund LP (USO)
- 1-Year Performance: N/A
- Expense Ratio: 0.79%
- Annual Dividend Yield: 0.00%
- AUM: $2.51 billion
- 3 Month Avg. Volume: 6,372,225
- Number of Holdings: 2
- Structure: Commodity Pool
- Inception Date: 2006
The United States Oil Fund LP seeks to reflect the daily changes in percentage terms of the spot price of light, sweet crude oil delivered to Cushing, Oklahoma.
USO uses short-term WTI futures contracts to track the intra-day spot price of oil.
As such, this investment vehicle is not designed to be held for more than a single trading day.
USO is vulnerable to severe contango and backwardation over a longer investing period, that is, when the futures price of a commodity is higher or lower than the expected spot price of the contract at maturity.
In sum, this is a massive fund with plenty of liquidity – and probably your best option.
USO Top Holdings:
- Future Contract on WTI Crude May 2022 (72.8%)
- United States Treasury Bills (27.2%)
#2. ProShares Ultra Bloomberg Crude Oil ETF (UCO)
- 1-Year Performance: N/A
- Expense Ratio: 0.95%
- Annual Dividend Yield: 0.00%
- AUM: $1.22 billion
- 3 Month Avg. Volume: 719,128
- Number of Holdings: 3
- Structure: Commodity Pool
- Inception Date: 2008
The ProShares Ultra Bloomberg Crude Oil ETF is a 2x leveraged fund that seeks to track the daily performance of the Bloomberg Commodity Balanced WTI Crude Oil Index.
The index that UCO tracks consists of oil futures contracts, so there may be deviations between spot price crude oil performance and UCO for periods longer than a day.
The leverage is the difference between this fund and the previously mentioned United States Oil Fund LP (USO).
Generally speaking, UCO will deliver 2x the daily spot price of crude oil. If the Bloomberg Commodity Balanced WTI Crude Oil Index increases 2% in a day, then UCO will increase 4%.
The leverage also works to the downside.
Speaking of, there’s another leveraged crude oil ETF for the bears: the ProShares UltraShort Bloomberg Crude Oil ETF (SCO).
UCO Top Holdings:
- Crude Oil Futures – June 2022 (33.61%)
- Crude Oil Futures – March 2022 (33.21%)
- Crude Oil Futures – December 2022 (33.19%)
#3. United States 12 Month Oil Fund LP (USL)
- 1-Year Performance: +68.98%
- Expense Ratio: 0.88%
- Annual Dividend Yield: 0.00%
- AUM: $144 million
- 3 Month Avg. Volume: 65,656
- Number of Holdings: 12
- Structure: Commodity Pool
- Inception Date: 2007
The United States 12 Month Oil Fund seeks to track the daily changes in percentage terms of the price of light, sweet crude oil delivered to Cushing Oklahoma – just like USO.
However, USL’s benchmark is the near month futures contract to expire and the contracts for the following 11 months, while USO consists solely of the near month contract.
This potentially makes USL less impacted by contango and backwardation than USO.
Each of the 12 monthly contracts in USL receives an equal weighting.
For example, the futures contract due to expire next month does not influence USL more than the contract due to expire in 11 months.
USL Top Holdings:
- WTI Crude Future March 2022 (4%)
- WTI Crude Future April 2022 (4%)
- WTI Crude Future May 2022 (4%)
- WTI Crude Future June 2022 (4%)
- WTI Crude Future July 2022 (4%)
- WTI Crude Future August 2022 (4%)
- WTI Crude Future September 2022 (4%)
- WTI Crude Future October 2022 (4%)
- WTI Crude Future November 2022 (4%)
- WTI Crude Future December 2022 (4%)
- WTI Crude Future January 2022 (4%)
- WTI Crude Future February 2022 (4%)
- U.S. Dollars
#4. ProShares K-1 Free Crude Oil Strategy ETF (OILK)
- 1-Year Performance: N/A
- Expense Ratio: 0.68%
- Annual Dividend Yield: N/A
- AUM: $72 million
- 3 Month Avg. Volume: 54,052
- Number of Holdings: 3
- Structure: ETF
- Inception Date: 2016
The ProShares K-1 Free Crude Oil Strategy ETF seeks investment results that track the performance of the Bloomberg Commodity Balanced WTI Crude Oil Index, which is an index of crude oil futures contracts.
This is the same index that the 2x levered ProShares UCO tracks.
OILK is different from the other oil ETFs in this article because it does not issue a K-1 form, which gives investors one less thing to worry about during tax season.
OILK Top Holdings:
- WTI Crude – April 2022 (33%)
- WTI Crude – May 2022 (33%)
- WTI Crude – November 2022 (33%)
- U.S. Dollar
Alternatives to the Best Crude Oil ETFs
Another strategy to gain exposure to oil is to invest in an oil and gas exploration and production ETF.
These funds own companies that derive a substantial portion of their revenues from oil and natural gas exploration and production.
Here are some of the top ETFs in this category:
- Energy Select Sector SPDR Fund (XLE)
- Vanguard Energy ETF (VDE)
- SPDR S&P Oil & Gas Exploration & Production ETF (XOP)
- iShares U.S. Energy ETF (IYE)
- First Trust Natural Gas ETF (FCG)
- Invesco Dynamic Energy Exploration & Production ETF (PXE)
- Invesco DWA Energy Momentum ETF (PXI)
These provide exposure to oil in various ways and are more suitable for long-term investing.
Best Crude Oil ETFs: FAQs
What is the best oil ETF?
Some of the best oil ETFs are United States Oil Fund LP (USO), ProShares Ultra Bloomberg Crude Oil ETF (UCO), the United States 12 Month Oil Fund LP (USL), and the ProShares K-1 Free Crude Oil Strategy ETF (OILK). Note that OILK is the only true ETF. The others are structured as commodity pools, which come with additional tax reporting requirements.
Is there a 3x oil ETF?
Leveraged Crude Oil ETFs such as the ProShares Ultra Bloomberg Crude Oil (UCO) fund and the ProShares UltraShort Bloomberg Crude Oil (SCO) fund offer 2x long and short leverage, respectively, to the daily price of crude oil.
Is an Oil ETF a good investment?
Crude Oil ETFs are different from Oil & Gas Exploration & Production ETFs. Crude Oil ETFs are futures-based commodity ETFs designed for day-trading and are typically not suitable for a buy-and-hold investment strategy.
Bottom Line: Best Crude Oil ETFs
Commodity exposure can benefit your portfolio, but it’s important to use these crude oil ETFs as they were designed to be used.
Keep Reading:
This article is for informational purposes only, and it is not intended to be investment advice. Read our editorial guidelines and public equities research methodology to learn more about how we selected the best Crude Oil ETFs.
