The United States Oil Fund LP ETF (NYSE:USO) was higher in early trading this morning, as oil prices rose amid continued hopes for an OPEC production cap deal.
Last week, it was widely reported that OPEC member nations had reached a pact to limit oil production beginning in November. The cartel has yet to formally announce any deal yet, and the details are expected to be hashed out in a meeting next month. But initial reports, citing sources close to the talks, peg the production cap at $32.5 million barrels per day.
Similar deals have been attempted in the past, but quickly dissolved amid squabbles between OPEC members. If such a scenario were to occur again, oil prices would likely suffer massive losses and perhaps test multi-year lows once again.
With or without an oil production cap, many analysts remain skeptical of oil’s recovery amid sluggish demand and record production. Goldman Sachs last week said it expects oil prices to remain depressed.
But investors don’t seem too concerned, however. WTI crude oil prices have gained nearly 10% since the pact was reported, and continued to rise this morning. That action is pushing oil-focused ETFs higher as well.
USO shares rose $0.14 (+1.28%) to $11.07 in premarket trading Monday. Year-to-date, the largest ETF tracking the price of WTI crude oil has fallen 0.64%.