10-Q: UGA Reports Q3 2025 Net Income, Outperforms Benchmark

United States Gasoline Fund, LP (UGA) reported positive net income for the nine months ended September 30, 2025, and outperformed its benchmark, despite a decrease in total assets and partners' capital.

Summary

• Net income for the nine months ended September 30, 2025, was $1,272,023, a significant improvement from a net loss of $1,581,504 in the prior year period.
• Total assets decreased to $74,131,772 as of September 30, 2025, from $100,979,895 at December 31, 2024.
• Partners' capital decreased to $73,941,093 as of September 30, 2025, from $100,710,891 at December 31, 2024.
• Net asset value (NAV) per share increased to $64.30 at September 30, 2025, from $62.94 at December 31, 2024.
• The fund's actual total return for the nine months ended September 30, 2025, was 2.16%, outperforming its Benchmark Futures Contract's estimated return of (0.17)% by 2.33%.
• Limited Partner shares outstanding decreased to 1,150,000 as of September 30, 2025, from 1,600,000 at December 31, 2024.
• Cash and cash equivalents decreased to $60,238,947 at September 30, 2025, from $75,857,796 at December 31, 2024.
• Unrealized gain (loss) on open commodity futures contracts shifted to a loss of $(2,226,458) at September 30, 2025, from a gain of $2,757,430 at December 31, 2024.

Sentiment

Score: 7

Explanation: The fund demonstrated strong financial performance with positive net income and outperformance against its benchmark, driven by improved realized gains and reduced expenses. However, a significant decrease in total assets and partners' capital, coupled with a shift to unrealized losses on futures contracts, indicates underlying challenges and market volatility. The ongoing legal proceedings, though not directly against UGA, and general market risks temper the overall positive sentiment.

Positives

• Achieved positive net income of $1,272,023 for the nine months ended September 30, 2025, a substantial improvement from a $1,581,504 net loss in the prior year.
• Realized gains on closed commodity futures contracts significantly improved to $4,394,800 for the nine months ended September 30, 2025, compared to a loss of $6,007,659 in the same period last year.
• The fund's NAV per share increased to $64.30 from $62.94, and market value per share increased to $64.49 from $62.99, from December 31, 2024, to September 30, 2025.
• UGA's actual total return of 2.16% for the nine months ended September 30, 2025, outperformed its Benchmark Futures Contract's estimated return of (0.17)% by 2.33%.
• Operating activities generated positive cash flow of $6,280,594 for the nine months ended September 30, 2025, a significant turnaround from a negative cash flow of $3,054,758 in the prior year.
• Total expenses decreased to $626,997 for the nine months ended September 30, 2025, from $733,196 in the prior year period.
• The fund consistently tracked its benchmark, with an average daily difference of 0.011% for the 30-valuation days ended September 30, 2025, and 0.002% since inception, both within the +/10% target range.

Negatives

• Total assets decreased by approximately 26.59% from $100,979,895 at December 31, 2024, to $74,131,772 at September 30, 2025.
• Partners' capital decreased by approximately 26.58% from $100,710,891 at December 31, 2024, to $73,941,093 at September 30, 2025.
• The fund experienced a significant shift from an unrealized gain of $2,757,430 on open commodity futures contracts at December 31, 2024, to an unrealized loss of $(2,226,458) at September 30, 2025.
• Net cash flow from financing activities was negative $(28,041,821) for the nine months ended September 30, 2025, compared to positive $13,218,830 in the prior year, primarily due to lower additions and redemptions of partnership shares.
• Average interest rates earned on short-term investments were lower during the nine months ended September 30, 2025, compared to the prior year, resulting in lower income as a percentage of average daily total net assets.
• The Benchmark Futures Contract price decreased by approximately 4.33% over the nine months ended September 30, 2025.

Risks

• Market Risk: Exposure to changes in the market value of contracts, with potential for loss in excess of variation margin, and unlimited liability for contracts sold short.
• Commodity Price Risk: Fluctuations in gasoline prices directly affect the value of shares.
• Credit Risk: Risk of counterparty failure to perform obligations, especially with OTC swaps. Reliance on clearinghouses and FCMs, with potential for loss in case of FCM insolvency.
• Liquidity Risk: Investments in Gasoline Interests may be subject to periods of illiquidity due to market conditions or daily price limits on exchanges, potentially preventing prompt liquidation of positions.
• Contango and Backwardation: Natural market forces that can impact total returns relative to a hypothetical direct investment in gasoline, potentially causing underperformance or outperformance.
• Tracking Error: UGA may not perfectly track its benchmark due to execution prices differing from settlement prices, the impact of expenses and income, and the performance of Other Gasoline-Related Investments.
• Interest Rate Risk: Fixed income securities and other investments may fluctuate in value due to interest rate changes, potentially leading to losses or lower reinvestment rates.
• Inflation Risk: As inflation increases, the present value of cash and Treasury investments may decline.
• Money Market Fund Risk: No guarantee that government money market funds will preserve value at $1.00 per share, and UGA may lose money. Not FDIC insured.
• Geopolitical Conflict and Natural Disasters: Events like the COVID-19 pandemic, Russia-Ukraine war, Middle East conflicts, sanctions, tariffs, and natural disasters can cause volatility in commodity prices and impact the value, pricing, and liquidity of UGA's investments, potentially leading to substantial loss.
• Regulatory Changes: Evolving regulation of commodity interest trading, including potential changes to accountability levels, position limits, and margin rules for swaps, could negatively impact UGA's ability to meet its investment objective.
• Termination Risk: UGA may terminate under unforeseen circumstances, such as inability to meet investment objectives, insufficient net assets relative to expenses, or issues with the general partner, leading to liquidation and potential loss for investors.

Future Outlook

Management anticipates that interest rates may continue to stagnate in the near future. It is expected that fees and expenses paid by UGA may be lower than interest earned, potentially leading to the fund outperforming its benchmark as long as interest earned is greater than the fees and expenses. However, the impact of changes in U.S. federal income tax laws remains uncertain, and global economic slowdowns or recessions, geopolitical conflicts, and natural disasters could increase volatility and reduce demand for crude oil, impacting gasoline prices and the fund's investments.

Management Comments

• "USCF believes that market arbitrage opportunities will cause daily changes in UGA's share price on the NYSE Arca on a percentage basis to closely track daily changes in UGA's per share NAV on a percentage basis."
• "USCF further believes that daily changes in prices of the Benchmark Futures Contract have historically closely tracked the daily changes in spot prices of gasoline."
• "USCF believes that the net effect of these relationships will be that the daily changes in the price of UGA's shares on the NYSE Arca on a percentage basis will closely track, the daily changes in the spot price of gasoline on a percentage basis, plus interest earned on UGA's collateral holdings, less UGA's expenses."
• "USCF believes that it is not practical to manage the portfolio to achieve such an investment goal when investing in Futures Contracts and Other Gasoline-Related Investments." (referring to matching nominal price of NAV to spot price)
• "USCF anticipates that interest rates may continue to stagnate over the near future. It is anticipated that fees and expenses paid by UGA may be lower than interest earned by UGA. As such, USCF anticipates that UGA could possibly outperform its benchmark so long as interest earned is greater than the fees and expenses paid by UGA."
• "USCF believes that over both the medium-term and the long-term, changes in the price of crude oil will exert the greatest influence on the price of refined petroleum products such as gasoline."
• "USCF believes that gasoline has historically not demonstrated a strong correlation with equities or bonds over long periods of time."

Industry Context

The gasoline market remains influenced by crude oil prices, which have traded mostly between $65 and $80 since early 2023, following extreme volatility in early 2020 due to the COVID-19 pandemic and the Saudi-Russia price war. U.S. crude oil production averaged 13.4 mbd in Q3 2025, while OPEC output has risen but remains below pre-pandemic highs, with the cartel unwinding voluntary cuts. Geopolitical tensions, such as the Israel-Iran conflict speculation in June 2025 and the Trump administration's tariffs, add significant uncertainty and potential for price volatility, increasing the risk of global economic slowdowns that could reduce demand for crude oil and gasoline.

Comparison to Industry Standards

• The fund's average daily tracking difference of 0.011% for the 30-valuation days ended September 30, 2025, and 0.002% since inception, indicates effective management in meeting its objective of staying within +/10% of the Benchmark Futures Contract's daily percentage change.
• The fund's outperformance of its benchmark by 2.33% for the nine months ended September 30, 2025, suggests efficient management of expenses and effective utilization of interest income, especially when compared to the benchmark's negative return.
• The historical correlation analysis provided for unleaded gasoline against other energy commodities (crude oil, heating oil, natural gas) and major non-commodity asset classes (large cap US equities, US government bonds, global equities) offers a benchmark for investors to assess diversification benefits, showing varying degrees of correlation over different timeframes.

Legal Proceedings

• The Optimum Strategies Action against USO and USCF was dismissed with prejudice on March 15, 2023, with no notice of appeal filed.
• USCF and USO settled SEC and CFTC investigations on November 8, 2021, resulting in cease-and-desist orders and civil monetary penalties totaling $2,500,000 for violations related to disclosures during the extraordinary market conditions of early 2020.
• The In re: United States Oil Fund, LP Securities Litigation, a consolidated class action against USCF, USO, and others, had its complaint dismissed in its entirety without prejudice on September 29, 2025, with leave for the plaintiff to amend by November 26, 2025. USCF and other defendants intend to vigorously contest these claims.
• The Wang Class Action was voluntarily dismissed on August 4, 2020.
• The Mehan Action and In re United States Oil Fund, LP Derivative Litigation (derivative actions against USCF, USO, and others) are stayed pending the final disposition of motions to dismiss in the In re: United States Oil Fund, LP Securities Litigation.

Related Party Transactions

• UGA pays USCF a management fee equal to 0.60% per annum of average daily total net assets.
• UGA shares fees and expenses of independent directors and officers liability insurance on a pro rata basis with Related Public Funds, with UGA's portion estimated at $32,000 for the year ending December 31, 2025.
• UGA and certain Related Public Funds (USO, USL, UNG, UNL) pay a licensing fee to NYMEX equal to 0.015% on all net assets.
• USCF pays the fees of the Marketing Agent (ALPS Distributors, Inc.) and BNY Mellon for custodial, administrative, accounting, and transfer agency services provided to UGA and the Related Public Funds.

Stakeholder Impact

• Shareholders: Experienced an increase in NAV per share and market value per share, and the fund outperformed its benchmark. However, total assets and partners' capital decreased, and there's a risk of loss due to market volatility, contango/backwardation, and potential adverse tax law changes. Ongoing legal proceedings, though not directly against UGA, could create uncertainty.
• Authorized Participants: Continue to facilitate creation and redemption of shares, paying a $350 transaction fee per order. Some Authorized Participants were named in the In re: United States Oil Fund, LP Securities Litigation, though claims against several were voluntarily dismissed.
• Management (USCF): Continues to receive management fees (0.60% of NAV). Responsible for managing the fund and its investment strategy. Involved in ongoing legal proceedings related to other funds.
• FCMs/Counterparties: Provide brokerage and trading services, earning commissions. Exposed to credit risk from UGA, and UGA is exposed to their credit risk.
• Regulatory Authorities (SEC, CFTC, NFA): Continue to oversee UGA's operations and filings. USCF and USO previously settled enforcement actions with the SEC and CFTC.

Next Steps

• USCF, USO, and individual defendants intend to vigorously contest any amended claims in the In re: United States Oil Fund, LP Securities Litigation.
• Plaintiff in In re: United States Oil Fund, LP Securities Litigation has until November 26, 2025, to move to amend the complaint.
• OPEC plans to continue unwinding voluntary crude oil cuts and increasing quotas, with flexibility to adjust based on market conditions.
• Monitor the impact of potential changes in U.S. federal income tax laws.
• Monitor global economic and geopolitical developments, including tariffs and conflicts, for their potential impact on crude oil and gasoline prices.

Key Dates

Recommendation

While UGA demonstrated strong operational performance with positive net income and outperformance against its benchmark for the nine months ended September 30, 2025, the significant decline in total assets and partners' capital, coupled with a shift to unrealized losses on futures contracts, presents a mixed financial picture. The fund's ability to track its benchmark effectively and generate positive cash flow from operations are positives. However, the inherent volatility of the gasoline futures market, the impact of contango/backwardation, and the ongoing legal uncertainties related to USCF's other funds (which could indirectly affect sentiment or operational focus) warrant a cautious approach. The geopolitical landscape and potential for economic slowdowns also introduce considerable risk. Therefore, a 'hold' recommendation is appropriate, advising investors to monitor market conditions, the resolution of legal matters, and the fund's ability to sustain its positive income trend amidst asset contraction.

Keywords

Gasoline Futures, Commodity Pool, SEC Filing, 10-Q, UGA, RBOB Gasoline, Futures Contracts, Investment Fund, Energy Commodities, Financial Performance, NAV, Tracking Error, Contango, Backwardation, Market Risk, Credit Risk, Inflation Risk, Geopolitical Risk, USCF