UPDATE 2-United States Oil Fund says not aware of CFTC probe

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By Matthew Robinson and Rebekah Kebede

NEW YORK, Feb 27 (Reuters) - United States Oil Fund LP (USO.P) on Friday said it was unaware of an investigation the U.S. Commodity Futures Trading Commission said it had launched against the exchange-traded fund.

The CFTC said on Thursday it was investigating the fund -- which has swelled in size in recent months to hold about 20 percent of the front month crude contracts on the New York Mercantile Exchange -- concerning a large NYMEX trade made on Feb. 6.

USO sold more than 85,000 oil futures for March delivery on Feb. 6 -- accounting for nearly a quarter of the market's open interest -- and purchased nearly 78,000 contracts for April delivery, according to its website.

"United States Oil Fund, LP, while it does have ongoing discussions with its regulators, is not aware that it is a subject of any CFTC investigation regarding the trading on Feb. 6th, 2009," Chief Investment Officer John Hyland said in a statement.

"To the extent that there is any such investigation, United States Oil Fund, LP and its affiliates will fully cooperate. United States Oil Fund, LP puts a high value on compliance with applicable laws and regulations since an orderly and transparent market instills confidence in our investors."

A spokesman for the CFTC was not immediately available for comment.

The ETF is a passive investment vehicle traded on stock exchanges that allows non-oil trade participants exposure to oil futures movements.

The fund sells front month crude futures and buys second month crude at a predetermined point each month, called the "roll" period.

Some futures traders said the size of the USO's position being rolled over a short period -- just one day -- had depressed the value of the front-month and boosted the second month contract. USO on Feb. 18 said it had extended the monthly roll period to four days.

USO currently holds about 59,500 front-month April NYMEX oil futures contracts CLc1, according to the fund's website, out of total open interest of around 294,500 for April.

The fund also holds 4,000 financially settled NYMEX April oil contracts and over 31,000 April U.S. oil contracts on the Intercontinental Exchange. The market value of all USO's oil positions topped $4.3 billion as of Feb. 26. (Editing by Jim Marshall)