10-Q: US Oil Fund LP Reports Strong NAV Growth Amidst Market Volatility

United States Oil Fund, LP's Q2 2026 report shows a significant increase in Net Asset Value per share, driven by rising crude oil prices, despite ongoing market risks and legal challenges.

Summary

• The United States Oil Fund, LP (USO) reported a substantial increase in its Net Asset Value (NAV) per share to $105.50 as of June 30, 2026, up from $69.10 at the end of 2025.
• This growth was primarily driven by a significant rise in crude oil prices, with the Benchmark Oil Futures Contract increasing by approximately 21.04% during the six-month period.
• USO's total return for the six months ended June 30, 2026, was 52.68%, outperforming its benchmark by 2.05%.
• The fund experienced a net income of $618,312,510 for the six months ended June 30, 2026, a significant turnaround from a net loss of $32,658,947 in the same period of 2025.
• Total assets grew to $1,904,147,269 as of June 30, 2026, from $889,618,360 at the end of 2025.
• The fund continues to be involved in ongoing legal proceedings, including securities litigation and derivative actions, stemming from past market conditions and disclosures.

Sentiment

Score: 7

Explanation: StockSavvy.ai views this as a moderately positive filing, reflecting strong performance in the period driven by oil price appreciation, though ongoing legal proceedings and market volatility present persistent risks.

Positives

• Significant increase in Net Asset Value (NAV) per share from $69.10 to $105.50.
• Strong total return of 52.68% for the six months ended June 30, 2026.
• Outperformance of the benchmark by 2.05% for the six-month period.
• Net income of $618,312,510 for the six months ended June 30, 2026, compared to a net loss in the prior year.
• Substantial growth in total assets to $1,904,147,269.
• The crude oil futures market was in a state of backwardation during the six months ended June 30, 2026, which generally benefits futures-based strategies.
• The fund's NAV performance tracked within the established benchmark goal of +/- 10% over a 30-valuation day period.

Negatives

• The fund experienced a substantial unrealized loss of $271,246,360 on open commodity futures contracts as of June 30, 2026.
• Unrealized loss on open swap contracts was $8,519,360 as of June 30, 2026.
• Total expenses increased to $3,443,714 for the three months ended June 30, 2026, from $2,133,072 in the prior year period.
• The fund is subject to ongoing legal proceedings, including securities litigation and derivative actions, which could result in significant financial or reputational damage.
• The fund's investment objective is not for its NAV or market price to equal the spot price of crude oil, and tracking deviations can occur.
• The fund incurred negative price slippage of $2,467,010 on futures trades during the quarter ended June 30, 2026, though this was voluntarily offset by USCF.

Risks

• Market volatility in crude oil prices due to geopolitical events (e.g., Iran war, Red Sea disruptions) and supply/demand dynamics.
• Potential for tracking error between the fund's NAV and the Benchmark Oil Futures Contract due to expenses, interest income, and investment in Other Oil-Related Investments.
• Regulatory risks, including accountability levels and position limits imposed by exchanges like NYMEX and CFTC, which could restrict trading.
• Credit risk associated with counterparties to OTC swap contracts.
• Operational risks, including the potential for losses due to the insolvency of custodians or futures commission merchants.
• Interest rate risk, which could impact the value of fixed-income securities held by the fund.
• The risk that the fund's investments in money market funds could result in a loss of principal.
• The potential for significant losses due to drastic market occurrences affecting commodity prices and liquidity.

Future Outlook

The fund's investment objective is to track the daily changes in percentage terms of the spot price of light, sweet crude oil. Management believes that market arbitrage opportunities will cause daily changes in share price to closely track daily changes in NAV. The fund may continue to invest in Oil Futures Contracts beyond the Benchmark Oil Futures Contract and Other Oil-Related Investments if market conditions, regulatory requirements, or risk mitigation measures necessitate it. Management anticipates that interest rates may continue to stagnate, and that fees and expenses paid by USO may continue to be lower than interest earned, potentially allowing USO to outperform its benchmark.

Management Comments

• USCF believes that it is not practical to manage the portfolio to achieve an investment goal where the NAV or market price equals the spot price of crude oil or any particular futures contract over a time period greater than one day.
• USCF believes that market arbitrage opportunities will cause daily changes in USO's share price on the NYSE Arca on a percentage basis to closely track daily changes in USO's per share NAV.
• USCF anticipates that interest rates may continue to stagnate over the near future. It is anticipated that fees and expenses paid by USO may continue to be lower than interest earned by USO. As such, USCF anticipates that USO could possibly outperform its benchmark so long as interest earned is greater than the fees and expenses paid by USO.

Industry Context

StockSavvy.ai notes that the oil market experienced significant volatility during the reporting period, influenced by geopolitical events such as the Iran war and disruptions in maritime trade routes. This volatility, coupled with supply-demand dynamics and strategic reserve releases, impacted crude oil prices. The fund's performance is directly tied to these movements, and its strategy of investing in futures contracts and related instruments positions it to capture these price changes, albeit with inherent risks.

Comparison to Industry Standards

• The United States Oil Fund (USO) aims to track the daily percentage changes of the Benchmark Oil Futures Contract. Its performance is benchmarked against this contract, with a goal of staying within +/- 10% of its daily percentage change over 30-day periods.
• For the 30-valuation days ended June 30, 2026, USO's NAV change was (1.079)% while the Benchmark Oil Futures Contract change was (1.090)%, indicating performance within the target range.
• Over the six months ended June 30, 2026, USO's actual total return was 52.68%, compared to an estimated benchmark return of 50.63%, outperforming its benchmark by 2.05%. This outperformance is attributed to factors like interest income exceeding expenses.
• In contrast, for the six months ended June 30, 2025, USO's actual total return was (2.92)%, outperforming the estimated benchmark return of (5.12)% by 2.20%.
• The correlation matrix shows that crude oil has historically had a low to moderate correlation with other energy commodities (natural gas, gasoline, heating oil) and even lower correlation with broader market indices like US equities and bonds over longer periods (10 years). However, shorter-term correlations (1 year) can vary significantly.

Legal Proceedings

• Optimum Strategies Action: Dismissed with prejudice on March 15, 2023, regarding claims under the Securities Exchange Act of 1934.
• SEC and CFTC Investigations: Resolved on November 8, 2021, with cease-and-desist orders and a $2.5 million civil monetary penalty paid by USCF.
• In re: United States Oil Fund, LP Securities Litigation: A consolidated class action pending in the U.S. District Court for the Southern District of New York; defendants' motion to dismiss was granted without prejudice, and plaintiff has filed a motion for leave to amend.
• Mehan Action: A derivative action pending in California Superior Court, alleging breach of fiduciary duties; proceedings are stayed pending disposition of motions in the Securities Litigation.
• In re United States Oil Fund, LP Derivative Litigation: Consolidated derivative actions pending in the U.S. District Court for the Southern District of New York; proceedings are stayed pending disposition of motions in the Securities Litigation.

Related Party Transactions

• USCF Management Fee: USO pays USCF a fee of 0.45% per annum of average daily total net assets.
• USCF voluntarily offset $2,467,010 in negative price slippage on futures trades during Q2 2026, preventing an impact on USO's NAV.

Stakeholder Impact

• Shareholders: Benefit from the strong NAV growth and outperformance of the benchmark, but face risks from market volatility and ongoing legal proceedings.
• Authorized Participants: Continue to facilitate creation and redemption of shares, with a reduced transaction fee of $350 per order effective January 1, 2026.
• Regulators (SEC, CFTC): Involved in ongoing monitoring and past settlements related to investigations.
• Counterparties: Involved in OTC swap agreements, subject to credit risk and collateral arrangements.

Next Steps

• Continue to manage the portfolio to achieve the investment objective of daily changes in NAV reflecting daily changes in the spot price of light, sweet crude oil.
• Monitor market conditions, regulatory requirements, and risk mitigation measures, and adjust investment strategy accordingly, potentially including investments beyond the Benchmark Oil Futures Contract.
• Continue to manage expenses and interest income to potentially outperform the benchmark.
• Respond to ongoing legal proceedings and potential resolutions.

Key Dates

Recommendation

The fund has demonstrated strong performance in the reporting period due to favorable oil price movements and has outperformed its benchmark. However, persistent risks from market volatility, geopolitical instability, and ongoing significant legal proceedings warrant a cautious approach. While the NAV growth is positive, the inherent risks associated with commodity futures ETFs and the unresolved litigation suggest a 'hold' recommendation until greater clarity emerges on these fronts.

Keywords

Crude Oil Futures, Commodity ETF, Energy Market, NYMEX WTI, Futures Contracts, OTC Swaps, Market Risk, NAV Performance