What Contango Means For Oil ETFsTom Lydonupdated Jan 30, 2009TweetAt GET.com we maintain complete editorial integrity on our content & provide transparent & unbiased information. Companies don't pay us to include their products although we receive a compensation when you successfully apply to products from our partners. See how we make money here.At GET.com we maintain complete editorial integrity.Yesterday, we covered the issue of whether oil exchange traded fund (ETF) investors knew what they were doing when it came to these funds. (You do). But how does the issue of contago impact oil-related ETFs?Market Folly has an explanation on Seeking Alpha that investors might find interesting.The United States Oil Fund (USO) holds long positions on oil futures, rolling them forward each month. Three factors impact the ETF:Changes in the spot priceInterest income on uninvested cashThe roll yieldRight now, the price of oil in February 2009 is less than the price of oil in April 2009 - a classic case of contango. If the opposite were true, it would be backwardation. USO, and most commodity funds, buy the "near month" contract. Since they don't want to take delivery, the current month's contract is sold before expiration and the next month's contract is bought - called "rolling forward."USO's prospectus warns of such a situation: a negative "roll yield" could cause the net asset value of USO to deviate significantly from crude's spot price.This is an important reason to read the prospectus of the fund you're eyeing, and understand how different climates will impact the fund.Editorial Disclosure: Any personal views and opinions expressed by the author in this article are the author's own and do not necessarily reflect the viewpoint of GET.com. The editorial content on this page is not provided by any of the companies mentioned, and has not been reviewed, approved or otherwise endorsed by any of these entities. Opinions expressed here are author's alone, not those of the companies mentioned, and have not been reviewed, approved or otherwise endorsed by any of these entities.