10-Q: US Oil Fund Posts Strong Gains in H1 2026

The United States 12 Month Oil Fund, LP reported a significant increase in Net Asset Value (NAV) per share for the first six months of 2026, driven by favorable crude oil futures market movements.

Summary

• The United States 12 Month Oil Fund, LP (USL) reported a substantial increase in its Net Asset Value (NAV) per share for the six months ended June 30, 2026.
• USL's NAV per share rose from $33.31 at the end of 2025 to $45.08 by June 30, 2026, representing a 35.33% increase.
• This performance was driven by a 19.06% increase in the average price of Benchmark Oil Futures Contracts over the same period.
• The fund's investment objective is to have its daily NAV changes reflect the daily changes in the spot price of light, sweet crude oil.
• Expenses, including management fees and brokerage commissions, were noted, but interest and dividend income helped offset these costs.

Sentiment

Score: 7

Explanation: StockSavvy.ai views this as a moderately positive filing, reflecting strong performance in the first half of 2026 driven by favorable crude oil market conditions, though with ongoing operational expenses.

Positives

• Significant increase in Net Asset Value (NAV) per share, rising from $33.31 to $45.08 in the first six months of 2026.
• Total return for the six months ended June 30, 2026, was 35.33%, outperforming the benchmark's estimated return of 33.70%.
• The fund successfully tracked its benchmark within the established 10% range for average daily percentage changes.
• Positive net income of $14,995,019 for the six months ended June 30, 2026, compared to a net loss of $3,639,200 in the prior year period.
• The fund's investment objective was met, with NAV performance within the target tracking range of the Benchmark Oil Futures Contracts.

Negatives

• Total expenses for the six months ended June 30, 2026, were $242,735, an increase from $214,258 in the prior year period.
• Average interest rates earned on short-term investments were lower in the first half of 2026 compared to the same period in 2025.
• The fund experienced a net loss of $1,868,319 in the three months ended June 30, 2026, compared to a loss of $3,983,265 in the prior year period.
• Redemption of 550,000 partnership shares occurred during the second quarter of 2026, impacting capital.

Risks

• Market volatility in crude oil prices due to geopolitical events such as conflicts in the Middle East and supply/demand imbalances.
• Potential for imperfect correlation between the futures contracts held and the actual spot price of crude oil.
• Exposure to credit risk from counterparties, although mitigated by exchange clearinghouses.
• The fund's investment objective is not for its NAV or market price to equal the spot price of crude oil in dollar terms.
• The impact of contango and backwardation in the crude oil futures market on total returns.
• Regulatory changes, including position limits and margin rules for derivatives, could impact the fund's ability to meet its objective.
• Potential for loss if money market funds or custodians cease operations.

Future Outlook

The fund aims to continue tracking the daily percentage changes of the Benchmark Oil Futures Contracts. Management anticipates that interest rates may continue to stagnate, and that fees and expenses paid by USL may continue to be lower than interest earned, potentially allowing the fund to outperform its benchmark.

Management Comments

• USL seeks to achieve its investment objective by investing so that the average daily percentage change in its per share net asset value for any period of 30 successive valuation days will be within plus/minus ten percent (10%) of the average daily percentage change in the average of the prices of the Benchmark Oil Futures Contracts over the same period.
• USCF believes that market arbitrage opportunities will cause daily changes in USLs share price on the NYSE Arca on a percentage basis to closely track daily changes in USLs per share NAV on a percentage basis.
• USCF believes that the daily changes in the average prices of the Benchmark Oil Futures Contracts have historically tracked the daily changes in prices of light, sweet crude oil.
• USL has not limited the size of its offering and intends to utilize substantially all of its proceeds to purchase Benchmark Oil Futures Contracts and Other Oil-Related Investments to the extent possible.

Industry Context

StockSavvy.ai notes that the strong performance of the United States 12 Month Oil Fund, LP in the first half of 2026 is consistent with the observed volatility and upward trend in crude oil prices during that period, influenced by geopolitical events and supply/demand dynamics.

Comparison to Industry Standards

• For the 30-valuation days ended June 30, 2026, the average daily change in the Benchmark Oil Futures Contracts was (0.672)%, while USL's average daily change in per share NAV was (0.662)%. This 0.010% difference is within the fund's tracking goal of +/- 10%.
• Since inception (December 6, 2007) to June 30, 2026, the average daily change in the Benchmark Oil Futures Contracts was 0.018%, and USL's average daily change in per share NAV was 0.020%. This 0.002% difference is also within the fund's tracking goal.
• For the six months ended June 30, 2026, USL's actual total return was 35.33%, outperforming the benchmark's estimated total return of 33.70% by 1.64%.
• For the six months ended June 30, 2025, USL's actual total return was (7.42)%, outperforming the benchmark's estimated total return of (8.85)% by 1.43%.

Legal Proceedings

• Optimum Strategies Action: Claims dismissed with prejudice by the court.
• Settlement of SEC and CFTC Investigations: USCF and USO settled with SEC and CFTC, paying $2.5 million in aggregate civil monetary penalties.
• In re: United States Oil Fund, LP Securities Litigation: A consolidated class action lawsuit is pending, with a motion to amend the complaint currently under review.
• Mehan Action: A derivative action alleging breach of fiduciary duties is stayed pending disposition of motions in the related securities litigation.
• In re United States Oil Fund, LP Derivative Litigation: Two derivative actions alleging violations of securities laws and breach of fiduciary duties are stayed pending disposition of motions in the related securities litigation.

Related Party Transactions

• General Partner management fees are paid to United States Commodity Funds LLC (USCF) at 0.60% per annum of average daily total net assets.
• USCF is responsible for arranging administrative, custody, accounting, transfer agency, and other services.
• USL shares fees and expenses for independent directors and officers liability insurance on a pro rata basis with Related Public Funds.
• USL pays a licensing fee to NYMEX based on net assets, as part of an agreement with USCF.

Stakeholder Impact

• Shareholders benefited from a significant increase in NAV per share and a positive total return in the first half of 2026.
• Investors should be aware of the risks associated with commodity futures trading, including market volatility and potential for loss.
• The fund's structure allows for the creation and redemption of shares by Authorized Participants in Creation Baskets.
• Ongoing expenses, such as management fees and brokerage commissions, impact overall returns.

Next Steps

• Continue to manage the portfolio to ensure daily NAV percentage changes closely track the daily percentage changes of the Benchmark Oil Futures Contracts.
• Monitor market conditions, regulatory requirements, and risk mitigation measures.
• The fund has an unlimited number of shares that can be issued in the form of Creation Baskets.

Key Dates

Recommendation

The fund has demonstrated strong performance in the reporting period, successfully tracking its benchmark and outperforming it slightly. However, the inherent volatility of crude oil futures, ongoing expenses, and the potential for market disruptions warrant a cautious 'hold' recommendation. Investors should be aware of the risks associated with commodity-based ETFs.

Keywords

Crude Oil Futures, Commodity Pool, NYMEX WTI, Benchmark Oil Futures Contracts, NAV, Futures Contracts, Energy Commodities, Market Risk