10-Q: United States Gasoline Fund Reports Q1 2025 Results: NAV Increases Amidst Gasoline Price Volatility

United States Gasoline Fund (UGA) saw its net asset value (NAV) per share increase in the first quarter of 2025, driven by gains in gasoline futures contracts despite market volatility.

Summary

• The United States Gasoline Fund (UGA) is a commodity pool aiming to reflect the daily percentage changes in the spot price of gasoline.
• For the quarter ended March 31, 2025, UGA's net income was $2,065,308, or $1.34 per limited partner share.
• This compares to a net income of $15,923,170, or $10.40 per share, for the same period in 2024.
• The NAV per share increased from $62.94 at the beginning of the period to $64.28 at the end of the period.
• The fund held 935 NYMEX gasoline futures contracts as of March 31, 2025.
• The average daily change in the Benchmark Futures Contract was (0.029)%, while the average daily change in the per share NAV of UGA over the same time period was (0.017)%.
• The fund's total net assets averaged $94,720,643 during the quarter.
• The fund's management fee is 0.60% per annum of average daily total net assets.
• The gasoline futures market experienced both contango and backwardation during the quarter.
• The fund is exposed to risks related to commodity price fluctuations, market volatility, and potential regulatory changes.

Sentiment

Score: 5

Explanation: The report presents a mixed picture, with an increase in NAV but a significant decrease in net income compared to the previous year. The report also highlights various risks and uncertainties, resulting in a neutral sentiment score.

Positives

• The fund's NAV per share increased during the quarter.
• UGA's actual total return outperformed its benchmark by 0.79%.
• The fund maintains a policy of continuously monitoring its exposure to market and counterparty risk.
• The fund has unlimited shares registered and available for issuance.

Negatives

• Net income was significantly lower compared to the same period last year.
• The fund is subject to risks associated with contango and backwardation in the gasoline futures market.
• The fund's performance is subject to market volatility and regulatory changes.
• The fund is exposed to credit risk if counterparties are unable to meet their obligations.

Risks

• The fund is exposed to commodity price risk, particularly gasoline price risk.
• Market volatility, including events like the Russia-Ukraine war and the COVID-19 pandemic, could impact the price of commodities and the value of UGA's investments.
• Regulatory changes, such as position limits and margin requirements for swaps, could affect the fund's ability to meet its investment objective.
• The fund is subject to interest rate risk and inflation risk, which could erode the value of its assets.
• The fund may potentially lose money by investing in government money market funds.
• The fund is subject to credit risk if counterparties are unable to meet their obligations.
• The fund is subject to interest rate risk, which may prevent UGA from investing fully at prevailing rates until any current investments in Treasuries mature in order to avoid selling those investments at a loss.
• As inflation increases, the present value of UGAs assets may decline.

Future Outlook

The report contains forward-looking statements regarding future events and performance, which are subject to risks and uncertainties, including economic conditions, market volatility, and regulatory changes.

Industry Context

The report provides context on the gasoline market, including factors influencing gasoline prices such as crude oil prices, refining capacity, and economic conditions.

Comparison to Industry Standards

• The report compares the monthly movements of unleaded gasoline prices versus the monthly movements of the prices of several other energy commodities, such as natural gas, crude oil and diesel-heating oil, as well as several major non-commodity investment asset classes, such as large cap U.S. equities, U.S. government bonds and global equities.
• The report notes that gasoline has historically not demonstrated a strong correlation with equities or bonds over long periods of time.

Legal Proceedings

• USCF and USO were named as defendants in an action filed by Optimum Strategies Fund I, LP, a purported investor in call option contracts on USO (the Optimum Strategies Action).
• On June 19, 2020, USCF, USO, John P. Love, and Stuart P. Crumbaugh were named as defendants in a putative class action filed by purported shareholder Robert Lucas (the Lucas Class Action).
• On July 10, 2020, purported shareholder Momo Wang filed a putative class action complaint, individually and on behalf of others similarly situated, against defendants USO, USCF, John P. Love, Stuart P. Crumbaugh, Nicholas D. Gerber, Andrew F Ngim, Robert L. Nguyen, Peter M. Robinson, Gordon L. Ellis, Malcolm R. Fobes, III, ABN Amro, BNP Paribas Securities Corp., Citadel Securities LLC, Citigroup Global Markets Inc., Credit Suisse Securities USA LLC, Deutsche Bank Securities Inc., Goldman Sachs & Company, JP Morgan Securities Inc., Merrill Lynch Professional Clearing Corp., Morgan Stanley & Company Inc., Nomura Securities International Inc., RBC Capital Markets LLC, SG Americas Securities LLC, UBS Securities LLC, and Virtu Financial BD LLC, in the U.S. District Court for the Northern District of California as Civil Action No. 3:20-cv-4596 (the Wang Class Action).
• On August 10, 2020, purported shareholder Darshan Mehan filed a derivative action on behalf of nominal defendant USO, against defendants USCF, John P. Love, Stuart P. Crumbaugh, Nicholas D. Gerber, Andrew F Ngim, Robert L. Nguyen, Peter M. Robinson, Gordon L. Ellis, and Malcolm R. Fobes, III (the Mehan Action).
• On August 27, 2020, purported shareholders Michael Cantrell and AML Pharm. Inc. DBA Golden International filed two separate derivative actions on behalf of nominal defendant USO, against defendants USCF, John P. Love, Stuart P. Crumbaugh, Andrew F Ngim, Gordon L. Ellis, Malcolm R. Fobes, III, Nicholas D. Gerber, Robert L. Nguyen, and Peter M. Robinson in the U.S. District Court for the Southern District of New York at Civil Action No. 1:20-cv-06974 (the Cantrell Action) and Civil Action No. 1:20-cv-06981 (the AML Action), respectively.

Related Party Transactions

• USCF Management Fee: Under the LP Agreement, USCF is responsible for investing the assets of UGA in accordance with the objectives and policies of UGA.
• UGA pays all costs and expenses associated with the ongoing registration of its shares subsequent to the initial offering.
• UGA is responsible for paying its portion of the directors and officers liability insurance for UGA and the Related Public Funds and the fees and expenses of the independent directors who also serve as audit committee members of UGA and the Related Public Funds.
• Licensing Fees: UGA entered into a licensing agreement with the NYMEX on April 10, 2006, as amended on October 20, 2011.
• Investor Tax Reporting Cost: The fees and expenses associated with UGAs audit expenses and tax accounting and reporting requirements are paid by UGA.

Stakeholder Impact

• Shareholders: The fund's performance directly impacts shareholder returns.
• Authorized Participants: The fund's creation and redemption activities affect Authorized Participants.
• General Partner (USCF): USCF's management and fees are critical to the fund's operations.
• Customers: The fund's investment objective is to reflect the daily changes in the spot price of gasoline, which indirectly affects consumers.
• FCMs: The fund's trading activities impact FCMs.

Key Dates

Keywords

gasoline, futures contracts, RBOB, United States Gasoline Fund, NAV, commodity pool, USCF, NYMEX, contango, backwardation