Investors recently piled into funds that try to provide direct exposure to the price of oil:
Most commodity ETFs own contracts for future delivery, not the physical commodity itself. Future contracts expire every month or so and funds then have to trade into new contracts. This introduces unique costs for commodity ETFs and this post explains how they work.
Cost #1: Rolling Futures
The cost of rolling into new contracts is the main reason ETF returns (USO in blue) differ from physical commodity prices (spot WTI in grey):
That chart is deceiving because