10-Q: USO Q1 2026 Financial Results and Market Update

United States Oil Fund, LP reports significant net income of $983.7 million for Q1 2026, driven by a 76.56% increase in the Benchmark Oil Futures Contract price.

Summary

• Net income for the three months ended March 31, 2026, was $983.7 million, compared to $40.3 million for the same period in 2025.
• Net asset value (NAV) per share increased from $69.10 at December 31, 2025, to $126.39 at March 31, 2026.
• Total assets grew to $2.74 billion as of March 31, 2026, up from $889.6 million at year-end 2025.
• The fund held 23,766 NYMEX WTI Crude Oil Futures contracts as of March 31, 2026.
• The fund's total return for the quarter was 82.91%.

Sentiment

Score: 8

Explanation: StockSavvy.ai views this as a strong performance report, reflecting significant gains for shareholders, though tempered by ongoing legal risks and geopolitical uncertainty.

Positives

• Strong quarterly performance with a total return of 82.91% for shareholders.
• Significant increase in net income to $983.7 million.
• Successful tracking of the Benchmark Oil Futures Contract within the stated plus/minus 10% goal over the 30-valuation day period.
• Reduced transaction fees for Authorized Participants from $1,000 to $350 per order effective January 1, 2026.

Negatives

• Increased brokerage commissions due to higher trading volume and number of contracts held.
• Continued exposure to market volatility and geopolitical risks impacting oil prices.
• Ongoing legal expenses related to multiple class action and derivative lawsuits.

Risks

• Geopolitical instability, specifically the Iran war and closure of the Strait of Hormuz, causing extreme price volatility.
• Potential for tracking error if the fund is forced to invest in assets beyond the Benchmark Oil Futures Contract due to regulatory or liquidity constraints.
• Credit risk associated with OTC swap counterparties.
• Market risk inherent in commodity futures, including the potential for prices to fall below zero.
• Potential for loss of assets held with custodians or FCMs in the event of their insolvency.

Future Outlook

Management anticipates that interest rates may continue to stagnate and that fees and expenses may remain lower than interest earned, potentially allowing the fund to outperform its benchmark. However, the outlook remains subject to significant uncertainty due to geopolitical conflicts, specifically the Iran war, and potential regulatory changes.

Management Comments

• Management notes that the Iran war was the primary driver of crude oil prices during the first quarter of 2026.
• Management believes that market arbitrage opportunities will cause daily changes in share price to closely track daily changes in NAV.
• Management intends to continue to invest primarily in the Benchmark Oil Futures Contract but retains the ability to use other oil-related investments if market conditions or regulatory requirements necessitate.

Industry Context

StockSavvy.ai notes that the fund's performance is highly sensitive to geopolitical events in the Middle East, specifically the Strait of Hormuz, which has created a supply-demand imbalance. The fund's transition back to the Benchmark Oil Futures Contract aligns it with its historical strategy, though it remains vulnerable to the same regulatory and liquidity pressures that impacted the broader commodity ETF sector in 2020.

Comparison to Industry Standards

• The fund's tracking error remains within the self-imposed 10% threshold, consistent with industry standards for commodity pools.
• The fund's management fee of 0.45% is competitive within the commodity ETF space.
• The fund's reliance on OTC swaps for flexibility is a common practice among similar commodity funds to manage position limits.

Corporate Governance

Legal Proceedings

• In re: United States Oil Fund, LP Securities Litigation (pending motion to dismiss).
• Mehan Action (stayed pending outcome of securities litigation).
• In re United States Oil Fund, LP Derivative Litigation (stayed pending outcome of securities litigation).

Related Party Transactions

• Management fees paid to USCF.
• Licensing fees paid to NYMEX.
• Fees paid to independent directors of USCF.

Stakeholder Impact

• Shareholders benefited from a significant increase in NAV.
• Authorized Participants benefit from reduced transaction fees.
• Legal proceedings continue to represent a potential risk to the fund's capital.

Next Steps

• Continue monitoring geopolitical developments in the Middle East.
• Maintain compliance with SEC and CFTC regulations regarding position limits.
• Continue legal defense in ongoing class action and derivative litigation.

Key Dates

Recommendation

While the fund has delivered strong returns, the high sensitivity to geopolitical events and ongoing legal uncertainties suggest a cautious approach for new investors.

Keywords

USO, Crude Oil, Commodity ETF, WTI Futures, Energy Investing, Oil Market, USCF