Retail Goes All-In on Oil: What Surging Prices Could Mean for the S&P 500

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Oil prices are climbing faster than a desperate man running from debt collectors. Brent crude skyrocketed to over $106 per barrel on Sunday, only to do the awkward “I’m just resting” dip on Monday morning.

In the meantime, retail investors-those brave souls with pockets full of optimism-are eagerly flocking to oil like moths to a flame. On Thursday, retail purchases in pure-play oil ETFs hit a record-breaking $211 million. Yes, you read that right, two hundred and eleven million dollars. A number so large, it could make your eyes bleed.

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The Kobeissi Letter, a well-known source of financial gossip, reports that the United States Oil Fund ETF (USO) alone absorbed $32 million in retail inflows, which is the third-largest daily buy in history. One can only imagine what’s going through these investors’ heads-“It’s fine, what could possibly go wrong?”

In total, retail purchases of oil ETFs are now around 10 times higher than the five-year average. That’s right, ten times. This suggests that individual investors have gone full throttle, eyes wide open, into the oily abyss.

“Trailing 1-month retail purchases in pure-play oil ETFs surged to a record +$211 million on Thursday. This exceeds the May 2020 peak of +$200 million and is 3 times the 2022 high of +$70 million,” the post confidently declares.

But before you start panicking that this oil price spike will lead us into a financial apocalypse, take a deep breath. Historical data says otherwise. The Kobeissi Letter casually mentioned that over the past four decades, whenever there’s been a 20% or more two-day oil surge, the S&P 500 has averaged a delightful 24% gain in the following 12 months.

And since 1986, the index has ended up higher a year after such a spike in six out of seven instances. Only one exception: the 2008 financial crisis, which, let’s be honest, was a disaster of a different breed.

“The strongest recovery was +54% following the 2020 pandemic crash, driven by a massive stimulus response from central banks and governments,” the letter cheerfully added. “Oil shocks are historically brief and provide long-term buying opportunities.”

In other words, the oil shocks that don’t happen to coincide with an economic collapse tend to result in a jolly old rally for the S&P 500. So, if you’re holding your breath waiting for disaster, it might be time to exhale-just a little bit.

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2026-03-16 11:35