10-Q: United States Gasoline Fund (UGA) Reports Strong Q1 2024 Performance Amidst Volatile Gasoline Market

United States Gasoline Fund, LP (UGA) reports a net income of $15.9 million for the quarter ended March 31, 2024, driven by gains in commodity futures contracts.

Summary

• United States Gasoline Fund, LP (UGA) reported a net income of $15.9 million for the three months ended March 31, 2024, compared to a net income of $1.96 million for the same period in 2023.
• The increase in net income was primarily driven by a realized gain on closed commodity futures contracts of $12.0 million and a change in unrealized gain on open commodity futures contracts of $2.8 million.
• Total income for the quarter was $16.1 million, while total expenses were $211,766.
• The fund's net asset value (NAV) per share increased from $60.64 at the beginning of the period to $71.04 at the end of the period.
• The fund held 1,057 futures contracts for gasoline traded on the NYMEX as of March 31, 2024.
• The fund's investment objective is to track the daily changes in percentage terms of the spot price of gasoline, as measured by the daily changes in the price of a specified short-term futures contract on gasoline.
• The fund's average daily change in NAV for the 30-valuation days ended March 31, 2024, was 0.239%, compared to 0.221% for the Benchmark Futures Contract.
• The fund's management fee is 0.60% per annum of average daily total net assets.
• The fund is exposed to market risk and credit risk through its trading of futures contracts and other gasoline-related investments.
• The fund has been involved in several legal proceedings, including class action lawsuits and investigations by the SEC and CFTC, some of which are ongoing.

Sentiment

Score: 7

Explanation: The document presents a positive outlook due to the significant increase in net income and NAV per share. However, it also acknowledges various risks and uncertainties, which temper the overall sentiment.

Positives

• UGA's net income significantly increased year-over-year, indicating strong performance.
• The fund's NAV per share saw a substantial increase, benefiting investors.
• UGA's tracking of its benchmark remained within the target range, demonstrating effective portfolio management.
• The fund's total return outperformed its benchmark, adding value for investors.
• Average interest rates earned on short-term investments held by UGA were higher during the three months ended March 31, 2024, compared to the three months ended March 31, 2023.

Negatives

• The fund is exposed to market risk and credit risk through its trading activities.
• UGA has been involved in several legal proceedings, which could result in financial losses and reputational damage.
• The fund's performance is subject to the impact of contango and backwardation in the gasoline futures market.
• The fund's ability to track its benchmark may be affected by various factors, including trading prices, expenses, and the performance of other gasoline-related investments.

Risks

• Market volatility in the unleaded gasoline markets and futures markets could negatively impact UGA'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 subject to regulatory risks, including exchange accountability levels, position limits, and price fluctuation limits.
• Infectious disease outbreaks like COVID-19 could negatively affect UGA and the valuation and performance of UGAs investments.
• UGA may potentially lose money by investing in government money market funds.

Future Outlook

The report contains forward-looking statements regarding management's plans and objectives for future operations, which are subject to various risks and uncertainties, including changes in inflation, market volatility, and geopolitical events.

Industry Context

The report discusses the impact of various factors on the gasoline market, including crude oil prices, refining capacity, consumer demand, and geopolitical events. It also provides information on the correlation between gasoline prices and other energy commodities and investment asset classes.

Comparison to Industry Standards

• The document does not provide specific comparisons to industry standards or comparable companies.
• However, it does mention other related public funds managed by USCF, such as USO, USL, UNG, UNL, and BNO, which could be considered peers in the commodity ETF space.
• The document also references the NYMEX and ICE Futures exchanges, which are key benchmarks for gasoline futures trading.

Legal Proceedings

• UGA and USCF are involved in several legal proceedings, including the Optimum Strategies Action, In re: United States Oil Fund, LP Securities Litigation, the Wang Class Action, the Mehan Action, and In re United States Oil Fund, LP Derivative Litigation.
• USCF and USO reached a resolution with the SEC and CFTC regarding matters set forth in certain Wells Notices.

Related Party Transactions

• USCF receives a management fee from UGA, calculated as 0.60% per annum of average daily total net assets.
• UGA pays a portion of the fees and expenses of the independent directors of USCF.
• USCF pays the fees of the Marketing Agent as well as BNY Mellons fees for performing administrative, custodial, and transfer agency services.
• USCF and UGA have also entered into a licensing agreement with the NYMEX pursuant to which UGA and the Related Public Funds, other than BNO, USCI and CPER, pay a licensing fee to the NYMEX.

Stakeholder Impact

• Shareholders benefit from the increase in NAV per share and the fund's strong performance.
• Authorized Participants are able to create and redeem shares in Creation Baskets and Redemption Baskets.
• The fund's performance is subject to the impact of market conditions and regulatory requirements, which could affect stakeholders.

Key Dates

Keywords

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