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

United States Brent Oil Fund, LP (BNO) has released its annual financial statements for the year ended December 31, 2023, showing a net loss and a decrease in net asset value per share.

Summary

• The United States Brent Oil Fund, LP (BNO) has released its annual financial statements for the year ended December 31, 2023.
• The fund experienced a net loss of $4,091,719 for the year, compared to a net income of $82,570,759 in 2022.
• The net asset value per share decreased from $28.26 at the end of 2022 to $27.39 at the end of 2023.
• The fund's total assets decreased from $235,119,050 in 2022 to $130,353,683 in 2023.
• The fund held 1,689 futures contracts for Brent crude oil at the end of 2023.
• The fund's management fee is 0.75% per annum of average daily total net assets.
• The fund's total expenses were $1,766,795 for 2023, compared to $2,645,248 in 2022.
• The fund's limited partner shares outstanding decreased from 8,200,000 in 2022 to 4,750,000 in 2023.

Sentiment

Score: 3

Explanation: The document indicates a negative performance for the fund with a net loss, decreased NAV, and reduced total assets. The sentiment is negative due to the poor financial results.

Positives

• The fund maintained effective internal control over financial reporting as of December 31, 2023.
• The fund's financial statements are presented fairly in conformity with accounting principles generally accepted in the United States of America.
• The fund has a diversified portfolio of investments in crude oil futures contracts and cash equivalents.

Negatives

• The fund experienced a net loss of $4,091,719 for the year ended December 31, 2023.
• The net asset value per share decreased from $28.26 to $27.39 during the year.
• Total assets of the fund decreased significantly from $235,119,050 to $130,353,683.
• The fund experienced a significant decrease in limited partner shares outstanding from 8,200,000 to 4,750,000.

Risks

• The fund is exposed to market risk from changes in the value of commodity futures contracts.
• The fund is exposed to credit risk from the failure of a counterparty to perform on a contract.
• The fund's performance is subject to the volatility of the Brent crude oil market.
• The fund's investments in money market funds are subject to the risk of loss.
• The fund is subject to the risk of financial failure by its clearing broker or custodian.

Future Outlook

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

Management Comments

• USCF believes that market arbitrage opportunities will cause daily changes in BNOs share price on the NYSE Arca on a percentage basis to closely track daily changes in BNOs per share NAV on a percentage basis.
• USCF further believes that the daily changes in prices of the Benchmark Futures Contract have historically tracked the daily changes in the spot price of Brent crude oil.
• USCF believes that the net effect of these relationships will be that the daily changes in the price of BNOs shares on the NYSE Arca on a percentage basis will closely track the daily changes in the spot price of Brent crude oil on a percentage basis, less BNOs expenses.

Industry Context

This announcement is typical for commodity-based exchange-traded funds, providing transparency to investors regarding the fund's performance and financial position. The fund's performance is directly tied to the price of Brent crude oil, making it sensitive to global oil market dynamics.

Comparison to Industry Standards

• The management fee of 0.75% is within the typical range for commodity-based ETFs.
• The fund's performance is directly comparable to other Brent crude oil tracking ETFs, such as the iPath Series B S&P GSCI Crude Oil Total Return Index ETN (OILB), which also aims to track the price of crude oil.
• The decrease in net asset value and total assets is likely reflective of the overall performance of the Brent crude oil market during the period.
• The fund's use of futures contracts and cash equivalents is standard practice for commodity ETFs.

Related Party Transactions

• USCF is the general partner of BNO and receives a management fee of 0.75% per annum of average daily total net assets.
• USCF pays the fees of BNY Mellon for custodial, administrative, accounting, and transfer agency services.
• USCF bears the marketing agent fee, which is equal to 0.025% of BNO's total net assets.

Stakeholder Impact

• Shareholders experienced a decrease in the net asset value per share.
• Shareholders experienced a net loss for the year.
• The fund's performance is directly tied to the price of Brent crude oil, impacting investors who seek exposure to this commodity.
• The fund's expenses impact the overall return for investors.

Next Steps

• The fund will continue to operate in accordance with its investment objective.
• The fund will continue to monitor its exposure to market and counterparty risk.
• The fund will continue to provide financial reports to its investors.

Key Dates

Keywords

Brent Crude Oil, Futures Contracts, Commodity Pool, Financial Statements, Net Asset Value, USCF, BNO, Oil Fund