Pain at the Pump, Opportunity in ETFs: Energy Funds Back in Vogue

Takeaways

WTI crude oil’s volatility and geopolitical turmoil drive record trading volume in some commodity ETFs
Funds like USO and UGA regain relevance as energy volatility returns
Tracking ETF activity and product launches may help investors stay ahead of market shifts and better manage risk

Four dollars and change at the pump. That’s the reality for some commuters across the country. Soon, $4 could be the nationwide average... if energy futures rally back toward the early-week highs. Global portfolio managers and institutional investors can play commodity markets on exchanges like the NYMEX, but retail allocators may feel left out of the action.

Have no fear—ETFs tracking crude oil, natural gas, and even wholesale gasoline futures are at the ready.

Commodity ETFs Roar Back to Life

Indeed, just this past Monday, the United States Oil Fund LP ETF (USO) posted record volume, eclipsing numbers seen during the 2008, 2020, and 2022 crises. Perhaps it’s not surprising, considering that the prompt-month WTI crude oil futures contract soared 30% at the high last Sunday night before dropping hard later in the day.

Elsewhere, the United States Natural Gas Fund LP ETF (UNG) is sometimes a popular vehicle during winter storms and hurricane season. Lastly, the somewhat unheralded United States Gasoline Fund LP ETF (UGA) has risen along with pump prices.

Whether you’re a large fund manager or an individual investor seeking to generate alpha, having the latest data on ETFs is becoming increasingly important to managing risk. Wall Street Horizon’s primary-sourced US ETF calendar is a critical tool for options and equity traders. Its wide coverage, multiple detailed components, and daily change alerts can keep you a step ahead.

When Geopolitics Moves Markets

In the here and now, active investors are clearly pouncing on geopolitical developments and emerging macroeconomic trends. To kick off March, the war in Iran and the effective closure of the Strait of Hormuz resulted in WTI crude oil’s best weekly performance since futures trading data began 43 years ago.

Here are some numbers: After bottoming last December, WTI and Brent were up 58% and 52%, respectively, coming into this week. Panic buying Sunday night sent NYMEX oil prices to more than double where they traded late last year.

Thinking about an Oil-Focused Strategy?

Amid the proliferation of option-income ETFs, buffered funds, and single-stock equity vehicles, old-school commodity exchange-traded products have sort of been tossed to the curb over the years.

USO, specifically, became notorious for its lousy returns compared to benchmark crude. Years of severe futures-market contango (a situation in which near-dated contracts sell at a discount to later-dated contracts) resulted in “negative roll yield” for the ETF. Put simply, the fund was forced to constantly buy high and sell low in the futures market due to the WTI crude oil futures term structure.

USO: From Contango Headaches to Backwardation Tailwinds

That all changed in 2022. Contango flipped to backwardation—so the roll yield turns positive, thereby benefiting USO. The fund didn’t gain much popularity, though. Gone were the days in 2008 and 2009 when oil ETFs were widely quoted on financial news—the ETF market had moved on to bigger and better things. Is that changing? Maybe so.

ETFs’ Comeback Kid

USO was back in the headlines last week. The Wall Street Journal profiled the commodity ETF, calling out its almost shockingly strong returns—not just this year, but over the past 12 months and longer.¹ Even before this month’s oil catapult, USO had more than doubled over the past five years, while WTI was up just fractionally.

The Overlooked Gasoline ETF

And then there’s the rarely publicized UGA gasoline ETF. RBOB (Reformulated Blendstock for Oxygenate Blending) futures have historically not had the same term-structure steepness as NYMEX WTI. Hence, UGA has actually been a pretty solid gasoline futures proxy in its 18-year history.

Before you get any ideas, it’s a dangerous strategy to attempt your own commuter hedging. While you can certainly buy UGA, the long-term return has paled in comparison to owning broad global equity index funds. Still, there are periods when UGA jumps—about when the national news quotes the going rate for a gallon of regular unleaded.

The Sector Angle, and What’s Next for Energy ETFs

Another portfolio strategy could be to simply overweight the Energy sector. The low-cost State Street Energy Select Sector SPDR ETF (XLE) has returned 143% over the past 15 years, while USO is down a whopping 70% and UGA is up 71%. USO restructured in 2020, which ultimately hurt performance before reverting to its pre-pandemic strategy.

What’s our team watching now? Not so much the near-term direction of energy commodity ETFs, but what issuers have up their sleeves in the months ahead. It would make sense to see new oil and gas funds come to market, particularly if crude oil hangs near $100 per barrel for months, not just hours.

Clues from the Gold Bull Market?

There might even be fusion strategies that blend Energy sector stocks with physical commodities. We’ve already seen something like this put out by WisdomTree Funds—its Efficient Gold Plus Gold Miners Strategy ETF (GDMN). The product has exposure to gold mining companies and access to leveraged gold futures contracts.

Gold’s popularity has grown since it bottomed in late 2015. If oil follows a similar path (recall that its low was the most dubious of all in April 2020, when the WTI prompt month traded to negative $37), perhaps ETF companies will offer more products for financial advisors and individual investors.

If heightened geopolitical uncertainty is the new normal, demand for such funds could increase. Interestingly, our data reveal that just three of the 186 ETF launches this year are tied to the Energy sector (with zero directly linked to oil). That could change.

The Bottom Line

Oil’s parabolic upside move stunned Wall Street and global markets to begin financial March Madness . It’s unclear what the next catalyst for geopolitical volatility will be, but investors have been active in commodity ETFs.

From USO’s record-breaking volume on Monday to UGA’s tight tracking with wholesale gasoline’s advance, diversification vehicles are available in the ETF universe. In these shaky markets, active risk management and a close eye on ETF developments remain the keys to uncovering new opportunities.

¹ Stock Market News, March 4, 2026: Nasdaq Gains 1.3%, Oil Prices Stabilize, The Wall Street Journal, March 4, 2026, https://www.wsj.com

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