10-Q: United States 12 Month Oil Fund, LP Reports First Quarter 2025 Results

United States 12 Month Oil Fund, LP's NAV increased slightly in Q1 2025, while navigating volatile crude oil futures markets.

Summary

• United States 12 Month Oil Fund, LP (USL) is a commodity pool aiming to mirror the daily percentage changes in the spot price of light, sweet crude oil.
• USL invests primarily in oil futures contracts and, to a lesser extent, in other oil-related investments.
• As of March 31, 2025, USL had 1,250,000 shares outstanding.
• For the three months ended March 31, 2025, USL's net income was $344,065, or $0.27 per weighted average limited partner share.
• The average daily change in the Benchmark Oil Futures Contracts was (0.006)%, while the average daily change in the per share NAV of USL over the same time period was 0.007% for the 30-valuation days ended March 31, 2025.
• The fund seeks to maintain an average daily NAV change within plus/minus 10% of the average daily change in the Benchmark Oil Futures Contracts over a 30-day period.
• The average price of the Benchmark Oil Futures Contracts decreased (1.79)% during the first quarter of 2025.
• USL's per share NAV increased by approximately 0.53% during the same period, closing at $38.21 on March 31, 2025.
• The fund's management fee is 0.60% per annum of average daily total net assets.
• USL may be impacted by European laws and regulations to the extent that it engages in futures transactions on European exchanges or derivatives transactions with European entities.

Sentiment

Score: 6

Explanation: The document presents a neutral outlook. While the fund's NAV increased slightly and tracked its benchmark, the decrease in net income and the volatile crude oil market introduce elements of uncertainty.

Positives

• USL's NAV per share increased slightly during the quarter.
• The fund successfully tracked its benchmark within the target range.
• USL's actual total return outperformed its benchmark by 0.75% for the three months ended March 31, 2025.
• USL did not exceed any position limits imposed by the NYMEX or ICE Futures for the three months ended March 31, 2025.

Negatives

• The average price of the Benchmark Oil Futures Contracts decreased (1.79)% during the first quarter of 2025.
• Net income per limited partner share decreased from $4.76 for the three months ended March 31, 2024, to $0.20 for the three months ended March 31, 2025.
• Total return decreased from 13.51% for the three months ended March 31, 2024, to 0.53% for the three months ended March 31, 2025.

Risks

• USL is subject to commodity price risk, particularly crude oil price risk.
• The fund is exposed to credit risk if counterparties to OTC contracts fail to meet their obligations.
• Market volatility, geopolitical events, and regulatory changes could impact USL's ability to track its benchmark.
• Inflation could erode the value of USL's cash and Treasury investments.
• USL may potentially lose money by investing in government money market funds.
• USL may be subject to interest rate risk, which may prevent USL from investing fully at prevailing rates until any current investments in Treasuries mature in order to avoid selling those investments at a loss.

Future Outlook

USCF anticipates that interest rates may continue to stagnate over the near future and that fees and expenses paid by USL may continue to be lower than interest earned by USL, potentially leading to outperformance of its benchmark.

Industry Context

The report provides insight into how USL navigated the volatile crude oil market during Q1 2025, influenced by factors such as OPEC production decisions, geopolitical tensions, and economic conditions. The fund's performance is assessed in the context of these market dynamics and compared to other energy commodities and investment categories.

Comparison to Industry Standards

• The report compares USL's performance to its benchmark, the average of the prices of specified short-term futures contracts on light, sweet crude oil.
• The report also provides correlation data comparing crude oil price movements to other energy commodities (natural gas, heating oil, gasoline) and major asset classes (large cap U.S. equities, U.S. government bonds, global equities).
• The report mentions other Related Public Funds managed by USCF, such as USO, UNG, UGA, UNL, and BNO, but does not provide specific performance comparisons.
• The report does not provide specific comparisons to other oil-related ETFs or investment products.

Legal Proceedings

• USL may be involved in legal proceedings arising primarily out of the ordinary course of business.
• USCF, as the general partner of USL and the Related Public Funds may, from time to time, be involved in litigation arising out of its operations in the ordinary course of business.
• The Optimum Strategies Action, In re: United States Oil Fund, LP Securities Litigation, Wang Class Action, Mehan Action, and In re United States Oil Fund, LP Derivative Litigation are ongoing legal proceedings involving USCF and/or USO.

Related Party Transactions

• USCF receives a management fee calculated as a percentage of USL's NAV.
• USCF pays the fees of the Marketing Agent and BNY Mellon for administrative, custodial, and transfer agency services.
• USL and the Related Public Funds pay a licensing fee to the NYMEX.

Stakeholder Impact

• The fund's performance directly impacts shareholders through changes in NAV.
• Market volatility and regulatory changes can affect the fund's ability to meet its investment objective, potentially impacting shareholder returns.
• Legal proceedings and regulatory actions can result in financial penalties and reputational damage, affecting shareholder confidence.

Next Steps

• USL will continue to monitor market conditions and adjust its portfolio to meet its investment objective.
• USCF will continue to manage USL's portfolio and comply with regulatory requirements.
• OPEC nations announced their intention to reduce their voluntary cuts by over 400,000 barrels per day, starting in May 2025, and to move forward with their plans to gradually cease all voluntary cuts which currently total 2.2 million barrels per day.

Key Dates

Keywords

oil, futures, USL, crude oil, commodity, NAV, contracts, Benchmark Oil Futures Contracts