USO at $129 Faces Reversal Risk as OPEC Capacity Rebuilds

The United States Oil Fund (USO) closed at $129.09 after opening 2026 at $69.16, delivering an 87% YTD gain driven by supply scares from the Strait of Hormuz shutdown and OPEC outages. The ETF surged as front-month WTI futures remained steeply backwardated, but reversed sharply in May with a 14.3% drop as WTI fell nearly 13% in one week. EIA data now show OPEC surplus capacity near zero in Q2 2026 yet forecast to recover to 2.55 mbpd by Q1 2027, likely shifting the futures curve into contango and eroding the roll yields that powered the rally.