Oil Just Spiked 35%: Ride It or Fade It?

Oil's 35% weekly spike has put crude above the psychological $90 mark, forcing traders to decide whether this is the start of a new uptrend or a blow-off move that unwinds just as quickly. USO is blasting higher. See the chart and price action here. Oil Prices Explode The move is being driven by a severe supply shock, with the Strait of Hormuz effectively shut and Middle East output and refining capacity disrupted. WTI and Brent have ripped to multi‑month highs as traders price in prolonged supply risk, pushing front‑month futures and oil‑linked ETFs sharply higher. The United States Oil Fund (NYSE:USO) tracks front-month WTI futures, giving investors a liquid way to express a directional call on crude without trading futures directly. A sustained move above $90 would likely reflect ongoing supply tightness and resilient demand, while a quick reversal would suggest a speculative overshoot. How USO, UCO, SCO Work USO seeks to reflect daily moves in spot WTI via near-dated futures and monthly rolls, making it sensitive to both price swings and curve structure. ProShares Ultra Bloomberg Crude Oil (NYSE:UCO) targets 2x the daily performance of a WTI futures index, amplifying short-term gains and losses. ProShares UltraShort Bloomberg Crude Oil (NYSE:SCO) delivers -2x the daily return of a similar crude index, effectively a leveraged short on oil. If You See $90 As A New Base For investors who believe 90-plus is the new floor and expect follow-through to higher highs, USO offers unlevered, simpler exposure suitable for multi-week holds. More aggressive traders expecting near-term momentum and willing to monitor positions daily may favor UCO for a magnified upside trade, recognizing its long-run return drag and high volatility. If You See A Fast Fade If the spike looks like a classic blow-off that will mean-revert quickly, tactical bears can reach for SCO to express a high-octane short view on crude. However, the combination of -2x leverage, daily resets and elevated implied volatility means SCO is generally a short-term trading vehicle, not a buy-and-hold hedge. ETF Choice By View Oil view (near term)InstrumentRationaleNew 90-dollar floor, moderate riskUSOUnlevered crude exposure via front-month WTI futuresStrong upside momentum, high riskUCO2x daily leverage for bulls expecting swift continuationSpike will unwind, high riskSCO-2x daily inverse play for tactical bears Photo: FXQuadro / Shutterstock