10-Q: United States Gasoline Fund (UGA) Reports Q3 2024 Results: NAV Decreases Amid Market Volatility

United States Gasoline Fund's NAV per share decreased to $58.51 in Q3 2024, reflecting market volatility and the impact of contango and backwardation in gasoline futures prices.

Summary

• The United States Gasoline Fund (UGA) is a commodity pool aiming to mirror the daily percentage changes in the spot price of gasoline.
• For the third quarter of 2024, UGA reported a net loss of $13.74 million, or $8.98 per limited partner share.
• The NAV per share decreased from $60.64 at the end of 2023 to $58.51 as of September 30, 2024.
• During the nine months ended September 30, 2024, UGA's actual total return, measured by changes in its per share NAV, was (3.51)%.
• The fund invests primarily in gasoline futures contracts and, to a lesser extent, in other gasoline-related investments.
• The fund's performance is affected by market conditions, including contango and backwardation in the gasoline futures market.
• UGA seeks to maintain an average daily percentage change in its NAV within plus/minus 10% of the average daily percentage change in the price of the Benchmark Futures Contract over any 30-day period.
• For the 30-valuation days ended September 30, 2024, the average daily change in the Benchmark Futures Contract was (0.273)%, while the average daily change in the per share NAV of UGA over the same time period was (0.258)%.
• As of September 30, 2024, UGA held 1,188 futures contracts for gasoline traded on the NYMEX.
• The fund had 1,650,000 shares outstanding as of September 30, 2024.
• The management fee is 0.60% per annum of average daily total net assets.
• The fund is exposed to market risk and credit risk related to its futures contracts and other investments.
• The fund is involved in several legal proceedings, including class action lawsuits, related to disclosures and market conditions in 2020.

Sentiment

Score: 4

Explanation: The report indicates a negative sentiment due to the decrease in NAV and net loss, offset by some positive aspects like higher interest rates earned on short-term investments and outperformance of the benchmark.

Positives

• Average interest rates earned on short-term investments held by UGA, including cash, cash equivalents and Treasuries, were higher during the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023.
• The fund's actual total return outperformed its benchmark by 2.92% for the nine months ended September 30, 2024.
• The fund has unlimited shares registered and available for issuance.
• The fund maintains disclosure controls and procedures to ensure accurate reporting.

Negatives

• UGA reported a net loss of $13.74 million for the three months ended September 30, 2024.
• The NAV per share decreased from $60.64 at the end of 2023 to $58.51 as of September 30, 2024.
• The fund's performance is subject to market volatility and the impact of contango and backwardation.
• The fund is involved in several legal proceedings, including class action lawsuits.
• The fund is exposed to credit risk related to its counterparties.

Risks

• Market volatility in the unleaded gasoline markets and futures markets could adversely affect the fund's performance.
• Geopolitical risks, including the Russia-Ukraine war and conflicts in the Middle East, could create supply disruptions and increase volatility.
• The fund is exposed to credit risk if counterparties are unable to meet their obligations.
• The fund's performance is impacted by contango and backwardation in the gasoline futures market.
• The fund may potentially lose money by investing in government money market funds.
• The fund is involved in several legal proceedings, which could result in significant costs and liabilities.
• Federal position limits could inhibit UGA's ability to invest in the Benchmark Futures Contracts and thereby could negatively impact the ability of UGA to meet its investment objective.

Future Outlook

The report contains forward-looking statements regarding the plans and objectives of management for future operations, which are subject to risks, uncertainties, and other factors.

Industry Context

The report discusses the impact of various factors on the gasoline market, including crude oil prices, refining capacity, and economic conditions. It also compares the performance of gasoline to other energy commodities and investment asset classes.

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.

Legal Proceedings

• The fund is involved in several legal proceedings, including 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.
• These proceedings relate to disclosures, market conditions, and alleged breaches of fiduciary duty.

Related Party Transactions

• USCF receives a management fee of 0.60% per annum of average daily total net assets.
• USCF pays the fees of the Marketing Agent as well as BNY Mellons fees for performing administrative, custodial, and transfer agency services.
• UGA also pays a portion of the fees and expenses of the independent directors of USCF.

Stakeholder Impact

• The decrease in NAV and net loss could negatively impact shareholders.
• Market volatility and geopolitical risks could affect the value of the fund's shares.
• Legal proceedings could result in significant costs and liabilities, impacting the fund's financial performance.

Key Dates

Keywords

gasoline, futures contracts, United States Gasoline Fund, NAV, RBOB, contango, backwardation, USCF, NYMEX, oil, commodities, investment