In short: Renick: USO options also lean bearish on the day oil sold off — "pretty amazing how consistently we see options traders fading big moves in oil."
In short: Long oil via a December WTI futures call spread (95/105) expiring the day after the midterm election — a tactical trade into the midterms: at $105 it pays ~10× the premium. Iran has the most leverage before the vote, and the Houthis now let it throttle Hormuz and the Red Sea. (Position is on the WTI future, not USO.)
USO is an ETF that tracks US crude oil (WTI). Woo doesn't own USO; he bet on December oil futures with a "call spread": he bought the right to buy oil at $95 and sold the right to buy it at $105. That caps his winnings at $105, but the bet was cheap, so if oil simply reaches $105 by the day after the midterm elections he makes about ten times what he paid. He could aim for $150, but thinks Trump backs down before then, so he picked a realistic target.
Why he thinks oil rises: Iran knows Trump is most vulnerable just before the midterms. Yemen's Houthis have now joined in, so Iran can choke both the Strait of Hormuz and the Red Sea shipping lane. Price gaps between local crude grades show real physical shortages in Europe and Asia, and governments are unwilling to keep releasing emergency stockpiles.
6:04What are you expecting to happen with WTI? — Yeah. So the way I'm thinking about this and again I want to say there are different ways of trading this. Okay. The position I've got on right now is actually, believe it or not, a call spread. It's a call spread that expires the day after the midterm election, and the way it's structured is that the lower strike is 95 and the upper strike is 105.
In short: Renick's evidence that the options market is not confirming the spot move. "Despite the move in crude oil and energy stocks, the trading in options around USO and XLE has been quite nuanced. Volume in the USO ETF is about 50% above the 30 day average… and in both there's a healthy 2 way trade going on. Puts outnumber calls by volume in the USO ETF, though some of the richer higher premium trades lean towards the bullish call side."
In short: The distinction he draws is the single most portable idea in the episode. Today's $90, with the Strait of Hormuz shut since March, "reflects an artificial shortage. A shortage that could be solved by an armistice. In other words, the shortage doesn't have anything to do with production difficulties. It has to do with politics and war." Four reasons it has not gone to $200: demand destruction where it bites ("if Amber was a cab driver in Colombo, Sri Lanka, she parked her car" — "the cure for high prices is always high prices"), above-ground inventory (floating storage plus the SPR "being drained at a very rapid rate" and Chinese and Japanese reserves), US swing production, and LNG substitution for oil. Those buffers are finite — "to the extent that this conflict continues… the adequacy of the above ground reserves gets worn down," at which point the price "will reflect an actual shortage as opposed to an anticipated shortage." The structural call is separate and dated: global underinvestment in sustaining capital "in excess of a billion dollars a day," cumulative and compounding, means "by 2029, 2030, 2031 we'll have a structural shortage of oil… and we won't be able to end that shortage with an armistice." Peak demand is dismissed outright: the 2030 forecasts "were wrong. They were simply wrong."
The most transferable idea in this interview is a distinction between two kinds of shortage. Oil at $90 with the Strait of Hormuz closed since March is an artificial shortage: nothing is wrong with the world's ability to produce oil, the barrels are simply blocked by politics and war. A shortage like that "could be solved by an armistice" — one diplomatic event can undo it, and the price collapses.
He also explains why $90 rather than $200. High prices destroyed demand, though not visibly in rich countries: a Toronto driver grumbles and fills the tank anyway, while a taxi driver in Colombo simply parks the car. On top of that the world drew on enormous buffers — oil floating on tankers, the US Strategic Petroleum Reserve "being drained at a very rapid rate," Chinese and Japanese stockpiles — plus flexible US production and the substitution of liquefied natural gas. Those buffers are finite, and as they run down the price starts reflecting an actual rather than an anticipated shortage.
The second shortage is different in kind. For years the industry — especially state-owned producers — has underspent on the routine maintenance capital required simply to keep existing fields producing, by more than a billion dollars a day, and that gap compounds. His conclusion: around 2029-2031 the world faces a structural shortage, "and we won't be able to end that shortage with an armistice." No political event fixes wells that were never drilled. That is the shortage he is positioning for, and why he will tolerate a bad oil price next year. He also dismisses the peak-demand forecasts that justified the underinvestment: "they were wrong. They were simply wrong."
20:12And the conflict tells us something that your listeners need to know about the oil business too. The price escalation we've seen from the $50 a barrel level before the conflict to as high as 115 and now 90 reflects an artificial shortage. A shortage that could be solved by an armistice. In other words, the shortage doesn't have anything to do with production difficulties.
In short: The vehicle for the single trade he calls "probably the ballsiest thing I've ever done in my life." After his net worth drew down ~60% from the top on the Iran "Memorandum of Understanding" peace-deal headline and crude hit ~$68, he converted equity into convexity: "I just liquidated like 5% of my portfolio, put all 5% in calls on oil, mostly USO at the time. And that's what slingshotted me back and brought me back to life." The mechanic he states plainly: "equity drops less than calls will go up on a rebound."
USO is an exchange-traded fund that tracks the price of crude oil by holding futures contracts. For a retail account it is the simplest way to own oil exposure — and, importantly here, to buy options on oil exposure.
This entry documents one specific decision. A headline about a Middle East "Memorandum of Understanding" knocked crude down to around $68 and took roughly 60% off his net worth from the peak. He believed the deal would not hold. Rather than simply sitting in his existing positions, he sold shares and used the proceeds to buy call options, mostly on USO — about 5% of the portfolio.
The reasoning is a piece of arithmetic worth internalising: on a rebound, shares recover roughly in line with the underlying, but out-of-the-money options can multiply many times over. So converting equity into options at the point of maximum despair concentrates all your remaining risk budget into the recovery. It worked — "that's what slingshotted me back and brought me back to life" — and he is honest that it was "probably the ballsiest thing I've ever done in my life."
The obvious caveat, which the episode does not soften: this is a maximally aggressive, single-outcome trade run on top of margin. It is a description of what he did, not a template for a diversified account.
In short: The biggest surprise of his year, given the geopolitics: "certainly in view of the way you asked the question, including the Strait of Hormuz, I would be surprised the oil price was this low." The diagnosis is inventory, not demand: "I think the market underestimated the amount of floating inventory that existed and the amount of inventory that existed in strategic and economic stockpiles… the fact that the interruption of energy molecules through the Straits of Hormuz has only impacted the oil market to the extent it has is a surprise." A second miss follows: higher oil "works in effect as a tax," and "I would have expected more economic weakness as a consequence of higher energy prices than has occurred."
The host's test was fair: if you had told Rule in December 2025 that the US and Israel would strike Iran and the Strait of Hormuz would close, what would he have predicted for oil? His answer is that he would have been badly wrong on the level — "I would be surprised the oil price was this low."
His explanation is about inventory rather than demand. Enormous quantities of crude sit on ships at sea ("floating inventory") and in government and commercial stockpiles, and that buffer absorbed far more disruption than he expected. North America saw no supply interruption at all. The buffer is why a blocked shipping chokepoint has not translated into the price spike the geopolitics implied.
There is a second miss layered on top, and it connects to his copper puzzle. Higher energy prices act "in effect as a tax" on consumers and businesses, so he expected visible economic weakness by now. There hasn't been any. Two separate commodity markets are telling him the same thing — the global economy is running hotter than his model says it should.
28:34Fast forward to August 2025 2026 rather, have any of these things surprised you? — Well, certainly in view of the way you asked the question including the Strait of Hormuz I would be surprised the oil price was this low. — Mhm. — I think I underestimated I think the market underestimated the amount of floating inventory that existed and the amount of inventory that existed in strategic and economic stockpiles.
In short: Two-way, and one of his three headwinds for equities: crude moves "from a price of right around say $82 where crude is trading today, probably up to about 100 over the next one or two months" — then reverses. "Any sort of move in crude is 100% supply shock. I don't sense it is going to prove to be long-lasting… we should be on the verge of carving out a deal to get the strait open," which brings crude "back down to probably around $50 a barrel or so between now and year end."
This is the clearest two-way call in the interview, which is why it is marked Neutral rather than either direction. Newton expects crude to run from roughly $82 "up to about 100 over the next one or two months" — that spike is one of his three headwinds for stocks, because it feeds through to inflation expectations and long-term bond yields.
Then he expects it to fall hard. His reasoning is about the cause of the rally: "any sort of move in crude is 100% supply shock" — a war-related blockage of a shipping strait, not genuine demand growth. Supply shocks are self-correcting once the physical problem is fixed, which is why he doesn't expect it to be "long-lasting." He thinks a deal to reopen the strait is close, and that crude goes "back down to probably around $50 a barrel or so between now and year end."
The practical implication runs through everything else: if oil follows that path, the inflation scare fades, the Fed doesn't need to hike, and the rate headwind on gold and stocks lifts — right around the October–November window he wants to buy.
16:15So this week's data specifically has caused yields to pull back down to 464 from highs that we saw last month near mid-470s. In the bigger picture, I do think that yields are going to start to press back to the upside. It's not necessarily that inflation's going to roar back. But I do think that crude oil, if my expectations are correct, we probably do move from a price of right around say $82 where crude is trading today, probably up to about 100 over the next one or two months. And if that
In short: Taking profits after the monster move. He was long 10,000 barrels of futures at the end of June and "now that it's had this monster rally, I've been gradually liquidating some of my futures contracts": "if they want to take some profits on oil, anybody that's following us, like with USO, I don't disagree." Still constructive, not out — "any dip is to be bought," he has "a lot of contracts left," and a blow-off top like gold/silver's is possible ("I'm not going to bet the ranch on that").
USO is a fund that tracks the price of crude oil. Hay's call to buy oil at the end of June — when almost everyone was mocking the bulls — has worked spectacularly: WTI went from about $69 to $93 and Brent above $100 in under a month. He was long 10,000 barrels of futures contracts through it.
So this is a profit-taking message, not a change of mind. He has been "gradually liquidating some of my futures contracts" simply because the move was so big, and he tells viewers plainly: "if they want to take some profits on oil, anybody that's following us, like with USO, I don't disagree."
But he is not out and not bearish. He still holds "a lot of contracts," believes "any dip is to be bought," and thinks a blow-off top — a final vertical spike like gold and silver had earlier in the year — is genuinely possible, though he won't "bet the ranch on that." His preferred way to stay exposed from here is energy shares, which have lagged the commodity, rather than the oil price itself.
7:28So, I just want people to know right up front, if they want to take some profits on oil, anybody that's following us, like with USO, I don't disagree. Now, where I think that there's still a lot more upside is with the energy equities. So, and before I forget, I want to do a big shout out to Rick Rule because I listened to him last month when everybody was hating on energy and he was one of the few along with Kevin Buer and Mike Rothman from Cornerstone that was saying, "You should be buying." Well, this is a great
In short: Cited as a contrarian-bullish signal for oil: "the largest short position ever on the main oil ETF, USO." Per John Kemp, "most of these short positions will eventually have to be repurchased, creating a considerable reservoir of potential future buying and upward pressure on prices." The record short is a positioning tailwind — buyers-in-waiting — layered on WTI open interest at its COVID-nadir low and record futures bearishness. A bullish-oil positioning read, not an explicit "buy USO" trade call.
USO is the biggest exchange-traded fund that simply tracks the price of oil, so it's the go-to way ordinary investors bet on crude going up or down. Right now traders have placed the largest bet against it ever — a record "short" position (borrowing and selling shares hoping to buy them back cheaper). Haymaker treats that as a contrarian buy signal for oil, not a warning.
The logic: everyone who is short has to eventually buy the shares back to close the trade, so a record short is really a giant pile of future buying waiting to happen. Stack that on top of two other extremes — the number of open oil-futures contracts ("open interest") has collapsed to its 2020 COVID-crash low even though this is the tightest oil-supply situation ever, and crude is stuck near $70 despite inventories being drawn way down this year — and every past time these gauges got this washed-out, oil went on to rally hard (roughly $18→$90 after 2020, $70→$90 after 2022). Add big countries (and smaller ones like Pakistan) needing to refill or build strategic oil reserves, and Haymaker expects an oil-price spike in the coming months. The USO mention is his shorthand for that bullish-oil setup — a read on positioning, not a specific "go buy this ETF" instruction.
In short: Positioning-capitulation tell: USO short interest exploded to ~145% of shares outstanding (only 13.5mm shares; ~10%+ borrow on a $2bn ETF). The fund holds ~20k Aug WTI longs but USO investors are synthetically net SHORT ~-9k futures — retail/non-futures money is now net short oil into a bullish inventory-draw setup; a hidden bullish divergence and small flush of last week's low.
USO is the headline ETF for betting on US crude oil (WTI). The remarkable thing Paulo found: the number of USO shares sold short has ballooned to about 145% of all the shares that exist — more than the entire fund — which is why it now costs over 10% a year just to borrow shares to short it. "Short interest" means investors borrowing shares to sell them, betting the price falls. Normally an ETF would simply create more shares to meet that demand (firms called "Authorized Participants" do this), but here they aren't — possibly because of an undisclosed regulatory cap on how many oil futures the fund can hold.
The upshot is a "synthetic short": even though the USO fund itself owns oil futures, the crowd trading USO is, on net, effectively betting against oil to the tune of about 9,000 futures contracts. Because this is hidden inside an ETF, the official futures positioning data ("Commitment of Traders") never sees it. To Paulo, retail and other non-futures money piling into the short side right as inventories are drawing down is a classic contrarian bullish signal.
In short: The WTI bull vehicle, +87% YTD (-15% from its May-19 high). Assets $1.7bn, down from $2.8bn on Mar 12 (-40%, ~$900mn of it outflows since Mar 31) — capitulation flows into a bullish setup.
USO is the best-known ETF for betting on the US oil price (WTI). Paulo's bullish case is the same as for Brent — he expects US oil inventories to fall to outright-shortage levels within weeks. The interesting tell is the money leaving USO even as it's up sharply this year: assets fell roughly 40% from their March peak, much of it investors cashing out. When a crowd sells the very thing that's working, it usually means people have given up too early — the kind of capitulation that often precedes the next leg up rather than a top.
In short: The best-known retail oil ETF, long the July26 WTI contract; assets now below $1.8bn (down from a $2.8bn March peak) — capitulation flows out of the plain-vanilla bull vehicle even as the inventory setup tightens. His standing WTI bull expression (fund side of the same trade).
USO is the most popular plain-vanilla way for a retail trader to bet oil rises — it just holds near-term US oil (WTI) futures, no leverage. What catches Paulo's eye is the flow: money is leaving it (assets down to under $1.8bn from $2.8bn) even as his thesis says the setup is getting more bullish. People are giving up on the oil-up bet right as the fundamentals tighten — the kind of capitulation that often precedes the move, not follows it.
In short: The plain long-front-month-WTI fund ($1.8bn, down ~$1bn from last month's high) is so heavily retail-shorted that only 10k shares are available to borrow at 7.9% (short interest 10.7mn shares / ~$1.4bn notional as of Mar 31) even amid the most severe backwardation and carry in history — a lopsided retail short into a bullish-oil set-up.
USO is the simplest way for a retail trader to bet oil goes up — it just holds the nearest oil futures contract. Paulo's point isn't a fresh call on USO; it's about who's on the other side. So many small traders are betting against oil (shorting USO) that there's almost none of it left to borrow, and the few shares you can borrow cost a punishing 7.9% a year. When a crowd is this lopsided betting one way — and the physical oil market (tight supply, "backwardation") is quietly saying the opposite — it's the kind of "consensus the market isn't confirming" that legendary trader Bruce Kovner hunts for, because a lot of people are set up to be wrong.
In short: Same roll-decay caveat as UNG — fine for a short move, lags the commodity over the long run.
USO is the oil equivalent of UNG — a fund that aims to track the price of oil for people who can't trade futures directly.
Same warning: the constant rolling of futures contracts creates a slow drag on returns, so it works for a short-term move but underperforms owning the commodity over the long haul.
28:55And they go up live via WhatsApp. So we have to recommend something that is broadly easy to buy. That's why like look at the UNG ETF, or the USO. Everyone knows that these ETFs, some of them where there's a curve play in the futures market — this is really important for people watching.
In short: The WTI equivalent of BNO (same front-month roll-yield mechanic), but the disfavored vehicle in this note: "if oil goes up a lot and Trump bans US exports, I want to be long East of Suez barrels, not US barrels. And that means BNO (Brent), not USO (WTI)." Bullish oil, but WTI carries US-intervention risk.
USO is the WTI (US oil) version of BNO — same front-month, roll-yield mechanic. Paulo is bullish oil overall, but in this note he specifically prefers BNO over USO. The reason is political risk: if oil rockets, a US crude-export ban would hold down American oil prices (WTI) while global prices (Brent) keep climbing. So USO is the "right idea, wrong barrel" — he wants the international exposure, not the one exposed to US price controls.
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