8-K: United States 12 Month Oil Fund, LP Releases 2023 Annual Financial Statements

United States 12 Month Oil Fund, LP (USL) has released its annual financial statements for the year ended December 31, 2023, showing a net loss of $56,520.

Summary

• The United States 12 Month Oil Fund, LP (USL) has released its financial results for the year ending December 31, 2023.
• The fund reported a net loss of $56,520 for the year, a significant decrease compared to the net income of $38,362,556 in 2022.
• USL's total assets decreased from $87,222,657 in 2022 to $67,162,488 in 2023.
• The net asset value (NAV) per share decreased slightly from $35.45 to $35.23.
• The fund held 938 oil futures contracts at the end of 2023, with a total notional value of $69,022,999.
• The fund's investments are primarily in NYMEX WTI crude oil futures contracts and US money market funds.
• The fund's general partner, United States Commodity Funds LLC (USCF), receives a management fee of 0.60% per annum of average daily total net assets.
• The fund's financial statements were audited by Cohen & Company, Ltd., who issued an unqualified opinion.
• The fund's internal controls over financial reporting were also deemed effective by the auditors.

Sentiment

Score: 4

Explanation: The sentiment is negative due to the significant decrease in net income and total assets, although the fund's internal controls are deemed effective and the audit was clean.

Positives

• The fund's internal controls over financial reporting were deemed effective by the auditors.
• The financial statements were audited by an independent registered public accounting firm, providing assurance on their accuracy.
• The fund maintains a diversified portfolio of oil futures contracts across multiple months.
• The fund has a clear investment objective to track the daily changes in the spot price of light, sweet crude oil.

Negatives

• The fund experienced a net loss of $56,520 in 2023, a significant decrease from the net income of $38,362,556 in 2022.
• Total assets decreased by approximately $20 million from 2022 to 2023.
• The net asset value per share decreased slightly from $35.45 to $35.23.
• The fund experienced a realized loss on closed commodity futures contracts of $3,987,201.

Risks

• The fund is exposed to market risk from changes in the value of futures contracts.
• The fund is exposed to credit risk from the potential failure of counterparties to perform on contracts.
• The fund's performance is subject to the volatility of the crude oil markets.
• The fund's investment objective may be impacted by contango and backwardation in the futures market.
• The fund is subject to the risk of financial failure by the clearing broker or custodian.
• The fund's investments in money market funds are subject to the risk of loss.

Future Outlook

The document does not contain any specific forward-looking statements or guidance.

Management Comments

• The President and CEO of United States Commodity Funds LLC, John P. Love, affirmed the accuracy and completeness of the annual report.
• Management is responsible for the financial statements and maintaining effective internal control over financial reporting.

Industry Context

This announcement is typical for commodity-based exchange-traded funds, providing transparency to investors through annual financial statements. The fund's performance is directly tied to the volatile crude oil market, which has seen significant fluctuations due to various global events.

Comparison to Industry Standards

• USL's management fee of 0.60% is within the typical range for commodity-based ETFs, although some competitors may offer slightly lower fees.
• The fund's investment strategy of holding a 12-month strip of oil futures contracts is a common approach for oil-tracking ETFs, similar to the United States Oil Fund (USO).
• The fund's performance is highly correlated with the price of crude oil, which is consistent with its investment objective.
• The fund's use of multiple FCMs is a standard practice to mitigate counterparty risk, similar to other large commodity ETFs.
• The fund's reporting and auditing practices are in line with industry standards for publicly traded investment vehicles.

Related Party Transactions

• USCF, the general partner, receives a management fee of 0.60% per annum of average daily total net assets.
• USL shares fees and expenses with other related public funds on a pro rata basis.
• USCF pays the fees of the marketing agent and BNY Mellon for their services.

Stakeholder Impact

• Shareholders experienced a decrease in net asset value per share.
• Shareholders are exposed to the risks associated with the crude oil market.
• The fund's performance directly impacts the returns for its investors.
• The fund's expenses, including management fees, impact the overall returns for shareholders.

Next Steps

• The fund will continue to operate in accordance with its investment objective.
• The fund will continue to provide annual financial statements to investors.
• The fund will continue to monitor market conditions and adjust its investment strategy as needed.

Key Dates

Keywords

oil futures, commodity fund, financial statements, net asset value, USL, crude oil, derivatives, NYMEX, investment, futures contracts