Curious Move in United States Oil Fund (USO)

Market movements aside, two recent events also signal longer-term bullish for commodity and commodity-related ETFs in general.

Back in February, Bloomberg reported that China’s sovereign wealth fund–China Investment Corp.–invested for the first time in the U.S. Oil Fund (USO) and became the fourth-largest holder with a value of $78.6 million.

Chesapeake Energy (CHK) also announced this week it has sold US$900 million in preferred stock to sovereign wealth funds from China, Singapore, South Korea, Abu Dhabi, as well as two private-equity firms, as reported by The Wall Street Journal.

The BP Gulf disaster most likely will increase investor interest in onshore energy and natural gas. So, conceivably, sovereign funds would continue to look at commodity investment vehicles such as UNG and USO for diversification, as well as a hedge against their massive dollar holdings.

Zerohedge