Impacts on RBC banning USO explaining to a futures beginner

USO was rolling into the upcoming front-month oil future and out of the current front-month oil future on a regular schedule. That's not a shock to the market.

Then on April 30, 2020 USO had a new schedule such that they were staying out of the front-month completely. But since the July contract became the front-month on May 20, then an update from USO is now needed. However, the June front-month was completely stable. It's the May front-month that was difficult.

http://www.uscfinvestments.com/documents/united-states-oil-fund-8-k-20200430.pdf

RBC has cited both its own internal risk management and direction from commodity regulators in dropping USO. Well, I personally don't see a risk with USO when on a new schedule of holding longer dated futures contracts. Also, the contango has become mild instead of extreme such that there is less risk of holding long positions.

But USO also has oil swaps with investment banks. The swaps mean that the investment banks just take the other side of the position from the position that USO wants. The swaps are probably more expensive than the direct buying of futures contracts. And so the situation is probably a small problem for USO of slightly higher expenses.

Maybe USO could buy and sell back-and-forth with the U.S. Strategic Petroleum Reserve as a client that never takes delivery. The would eliminate the critics. Then the SPR would gain storage fees.