What changed in this filing

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Item 1. Business

2024-02-29 compared with 2023-02-27 · 101 added, 101 removed, 803 unchanged (20% of the section changed)

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(together, “ICE Futures”) or other U.S.

and foreign exchanges (collectively, “Oil Futures Contracts”) and to a lesser extent, in order to comply with regulatory requirements or in view of market conditions, other oil-related investments such as cash-settled options on Oil Futures Contracts, forward contracts for oil, cleared swap contracts and non-exchange traded (“over-the-counter” or “OTC”) transactions that are based on the price of oil, other petroleum-based fuels, Oil Futures Contracts and indices based on the foregoing (collectively, “Other Oil-Related Investments”).

Market conditions that USCF currently anticipates could cause USL to invest in Other Oil-Related Investments include those allowing USL to obtain greater liquidity or to execute transactions with more favorable pricing.

and foreign exchanges (collectively, “Oil Futures Contracts”) and to a lesser extent, in order to comply with regulatory requirements, risk mitigation measures, liquidity requirements, or in view of market conditions, other oil-related investments such as cash-settled options on Oil Futures Contracts, forward contracts for oil, cleared swap contracts and non-exchange traded (“over-the-counter” or “OTC”) transactions that are based on the price of oil, and other petroleum-based fuels, Oil Futures Contracts and indices based on the foregoing (collectively, “Other Oil-Related Investments”).

Market conditions that USCF currently anticipates could cause USL to invest in Other Oil-Related Investments include, but are not limited to, those allowing USL to obtain greater liquidity or to execute transactions with more favorable pricing.

(For convenience and unless otherwise specified, Oil Futures Contracts and Other Oil-Related Investments collectively are referred to as “Oil Interests” in this annual report on Form 10-K).

In addition, USCF believes that market arbitrage opportunities will cause daily changes in USL’s share price on the NYSE Arca on a percentage basis to closely track daily changes in USL’s per share NAV on a percentage basis.

USCF further believes that the daily changes in the average prices of the Benchmark Oil Futures Contracts have historically closely tracked the daily changes in prices of light, sweet crude oil.

USCF further believes that the daily changes in the average prices of the Benchmark Oil Futures Contracts have historically tracked the daily changes in prices of light, sweet crude oil.

USCF believes that the net effect of these relationships will be that the daily changes in the price of USL’s shares on the NYSE Arca on a percentage basis will closely track the daily changes in the spot price of a barrel of light, sweet crude oil on a percentage basis, less USL’s expenses.

Investors should be aware that USL’s investment objective is not for its NAV or market price of shares to equal, in dollar terms, the spot price of light, sweet crude oil or any particular futures contract based on light, sweet crude oil, nor is USL’s investment objective for the percentage change in its NAV to reflect the percentage change of the price of any particular futures contract as measured over a time period greater than one day.

This is because natural market forces called contango and backwardation have impacted the total return on an investment in USL’s shares during the past year relative to a hypothetical direct investment in crude oil and, in the future, it is likely that the relationship between the market price of USL’s shares and changes in the spot prices of light, sweet crude oil will continue to be so impacted by contango and backwardation.

This is because natural market forces called contango and backwardation may impact and have impacted the total return on an investment in USL’s shares during the past year relative to a hypothetical direct investment in crude oil and, in the future, it is likely that the relationship between the market price of USL’s shares and changes in the spot prices of light, sweet crude oil will continue to be impacted by contango and backwardation.

(It is important to note that the disclosure above ignores the potential costs associated with physically owning and storing crude oil, which could be substantial).

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USCF Investments is a holding company that currently holds both USCF, as well as USCF Advisers LLC, an investment adviser registered under the Investment Advisers Act of 1940, as amended, (“USCF Advisers”).

USCF Advisers serves as the investment adviser for the USCF SummerHaven Dynamic Commodity Strategy No K-1 Fund (“SDCI”), USCF Midstream Energy Income Fund (“UMI”), USCF Dividend Income Fund (“UDI”), USCF Gold Strategy Plus Income Fund (“GLDX”) and USCF Sustainable Battery Metals Strategy Fund, each a series of the USCF ETF Trust.

USCF ETF Trust is registered under the Investment Company Act of 1940, as amended (the “1940 Act”).

USCF Advisers serves as the investment adviser for the USCF SummerHaven Dynamic Commodity Strategy No K-1 Fund (“SDCI”), the USCF Midstream Energy Income Fund (“UMI”), the USCF Gold Strategy Plus Income Fund (“GLDX”);

the USCF Dividend Income Fund (“UDI”), the USCF Sustainable Battery Metals Strategy Fund (“ZSB”), USCF Energy Commodity Strategy Absolute Return Fund (“USE”), USCF Sustainable Commodity Strategy Fund (“ZSC”), and USCF Aluminum Strategy Fund (“ALUM”), each of which is a series of the USCF ETF Trust.

It was also the investment adviser for two series of the USCF ETF Trust that liquidated all of their assets and distributed cash pro rata to all remaining shareholders:

the USCF SummerHaven SHPEI Index Fund (“BUY”), until October 2020, and the USCF SummerHaven SHPEN Index Fund (“BUYN”), until May 2020.

The USCF ETF Trust is registered under the Investment Company Act of 1940, as amended, (the “1940 Act”).

The Board of Trustees for the USCF ETF Trust consists of different independent trustees than those independent directors who serve on the Board of Directors of USCF.

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(“ALPS Distributors”), which serves as the marketing agent for USL (the “Marketing Agent”), and The Bank of New York Mellon (“BNY Mellon”), which serves as the administrator (the “Administrator”) and the custodian (the “Custodian”), and provides accounting and transfer agent services for, USL since April 1, 2020.

Brown Brothers Harriman & Co.

(“BBH&Co.”) served as the administrator and custodian for USL prior to BNY Mellon.

Certain fund accounting and fund administration services rendered by BBH&Co.

to USL and the Related Public Funds terminated on May 31, 2020 to allow for the transition to BNY Mellon.

The limited partners take no part in the management or control of, and have a minimal voice in USL’s operations or business.

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USCF may not be removed as general partner except upon approval by the affirmative vote of the holders of at least 66 and 2/3 percent of USL’s outstanding shares (excluding shares owned, if any, by USCF and its affiliates), subject to the satisfaction of certain conditions set forth in the LP Agreement.

The business and affairs of USCF are managed by a board of directors (the “Board”), which is comprised of four management directors (the “Management Directors”), each of whom are also executive officers or employees of USCF, and three independent directors who meet the independent director requirements established by the NYSE Arca Equities Rules and the Sarbanes-Oxley Act of 2002.

meet the independent director requirements established by the NYSE Arca Equities Rules and the Sarbanes-Oxley Act of 2002.

The Management Directors have the authority to manage USCF pursuant to the terms of the Sixth Amended and Restated Limited Liability Company Agreement of USCF, dated as of May 15, 2015 (as amended from time to time, the “LLC Agreement”).

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The net assets of USL consist primarily of investments in futures contracts for light, sweet crude oil, other types of crude oil, diesel-heating oil, gasoline, natural gas, and other petroleum-based fuels that are traded on the NYMEX, ICE Futures or other U.S.

and foreign exchanges (collectively, “Oil Futures Contracts”) and, to a lesser extent, in order to comply with regulatory requirements or in view of market conditions, other oil-related investments such as cash-settled options on Oil Futures Contracts, forward contracts for oil, cleared swap contracts and non-exchange traded over-the-counter (“OTC”) transactions that are based on the price of oil, other petroleum-based fuels, Oil Futures Contracts and indices based on the foregoing (collectively, “Other Oil-Related Investments”).

and foreign exchanges (collectively, “Oil Futures Contracts”) and, to a lesser extent, in order to comply with regulatory requirements, risk mitigation measures, liquidity requirements, or in view of market conditions, other oil-related investments such as cash-settled options on Oil Futures Contracts, forward contracts for oil, cleared swap contracts and non-exchange traded over-the-counter (“OTC”) transactions that are based on the price of oil, and other petroleum-based fuels, Oil Futures Contracts and indices based on the foregoing (collectively, “Other Oil-Related Investments”).

For convenience and unless otherwise specified, Oil Futures Contracts and Other Oil-Related Investments collectively are referred to as “Oil Interests” in this annual report on Form 10-K.

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In addition, USL may make use of a mixture of standard sized futures contracts as well as the smaller sized “mini” contracts.

While USCF has made significant investments in NYMEX Oil Futures Contracts, for various reasons, including the ability to enter into the precise amount of exposure to the crude oil market, position limits or other regulatory requirements limiting USL’s holdings, and market conditions, it may invest in Futures Contracts traded on other exchanges or invest in Other Oil-Related Investments.

While USCF has made significant investments in NYMEX Oil Futures Contracts, for various reasons, including the ability to

enter into the precise amount of exposure to the crude oil market, position limits or other regulatory requirements limiting USL’s holdings, and market conditions, it may invest in Futures Contracts traded on other exchanges or invest in Other Oil-Related Investments.

To the extent that USL invests in Other Oil-Related Investments, it would prioritize investments in contracts and instruments that are economically equivalent to the Futures Contracts, including cleared swaps that satisfy such criteria, and then, to a lesser extent, it would invest in other types of cleared swaps and other contracts, instruments and non-cleared swaps, such as swaps in the over-the-counter market (or commonly referred to as the “OTC market”).

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As USL’s assets reach higher levels, it is more likely to exceed position limits, accountability levels or other regulatory limits and, as a result, it is more likely that it will invest in accordance with such priority in Other Oil-Related Investments at such higher levels.

In addition, market conditions that USCF currently anticipates could cause USL to invest in Other Oil-Related Investments include those allowing USL to obtain greater liquidity or to execute transactions with more favorable pricing.

In addition, market conditions that USCF currently anticipates could cause USL to invest in Other Oil-Related Investments include, but are not limited to, those allowing USL to obtain greater liquidity or to execute transactions with more favorable pricing.

Business – Commodities Regulation” in this annual report on Form 10-K for a discussion of the potential impact of the regulation on USL’s ability to invest in OTC transactions and cleared swaps.

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Oil prices (along with drilling costs, availability of attractive prospects for drilling, taxes and technology, among other factors) determine exploration and development spending, which influence output capacity with a lag.

In the short run, production decisions by the Organization of Petroleum Exporting Countries (“OPEC”) also affect supply and prices.

In the short run, production decisions by the Organization of Petroleum Exporting Countries (“OPEC”) also

affect supply and prices.

Oil export embargoes and the current conflicts in the Middle East represent other routes through which political developments move the market.

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These levels and position limits apply to the futures contracts that USL invests in to meet its investment objective.

In addition to accountability levels and position limits, the NYMEX and ICE Futures also set daily price fluctuation limits on futures contracts.

In addition to accountability levels and position limits, the NYMEX and ICE Futures may also set daily price fluctuation limits on futures contracts.

The daily price fluctuation limit establishes the maximum amount that the price of a futures contract may vary either up or down from the previous day’s settlement price.

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The accountability levels and position limits are set forth in the April 23 CME Letter which superseded the April 16 CME Letter.

The April 23 CME Letter ordered USCF, USL and the Related Public Funds not to exceed accountability levels in excess of 10,000 futures contracts in the light, sweet crude oil futures contract for June 2020.

The April 23 CME Letter ordered USCF, USL and the Related Public Funds not to exceed accountability levels in excess

of 10,000 futures contracts in the light, sweet crude oil futures contract for June 2020.

While these limits no longer apply, NYMEX’s current accountability levels for any one month in the Benchmark Oil Futures Contract is 10,000 contracts, and an accountability level for all months of 20,000 net futures contracts for light sweet crude oil, do apply.

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No action was taken by NYMEX and USL did not reduce the number of Oil Futures Contracts held as a result.

Position limits differ from accountability levels in that they represent fixed limits on the maximum number of futures contracts that any person may hold and cannot allow such limits to be exceeded without express CFTC authority to do so.

Position limits differ from accountability levels in that they represent fixed limits on the maximum number of futures contracts that any person may hold and cannot be exceeded without express CFTC authority to do so.

In addition to accountability levels and position limits that may apply at any time, the NYMEX and ICE Futures impose position limits on contracts held in the last few days of trading in the near month contract to expire.

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For the fiscal year ended December 31, 2023, USL did not exceed any position limits imposed by the NYMEX and ICE Futures.

On October 15, 2020, the CFTC approved a final rule that amends the existing federal position limits regime set forth in Part 150 of the CFTC’s regulations as well as the framework for exchange-set position limits and exemptions (such final rule, the “Position Limits Rule”).

The Position Limits Rule establishes federal position limits for 25 core referenced futures contracts (comprised of agricultural, energy and metals futures contracts), futures and options linked to the core referenced futures contracts, and swaps that are economically equivalent to the core referenced futures contracts.

Part 150 of the CFTC’s regulations (“Position Limits Rule”) establishes federal position limits for 25 core referenced futures contracts (comprised of agricultural, energy and metals futures contracts), futures and options linked to the core referenced futures contracts, and swaps that are economically equivalent to the core referenced futures contracts that all market participants must comply with, with certain exemptions.

The Benchmark Oil Futures Contract will be subject to position limits under the Position Limits Rule, and USL’s trading does not qualify for an exemption therefrom.

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In connection with investing in Oil Futures Contracts and Other Oil-Related Investments, USL holds Treasuries, cash and/or cash equivalents that serve as segregated assets supporting USL’s positions in Oil Futures Contracts and Other Oil-Related Investments.

For example, the purchase of an Oil Futures Contract with a stated value of $10 million would not require USL to pay $10 million upon entering into the contract;

For example, the purchase of an Oil Futures Contract with a stated value of $10 million would not require USL to pay $10 million upon

entering into the contract;

rather, only a margin deposit, generally of 5% to 30% of the stated value of the Oil Futures Contract, would be required.

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USL may from time to time trade in Other Oil-Related Investments, including contracts based on the spot price of crude oil.

USCF endeavors to have the value of USL’s Treasuries, cash and cash equivalents, whether held by USL or posted as margin or other collateral, at all times approximate the aggregate market value of its obligations under its Oil Futures Contracts and Other Oil-Related Investments.

Commodity pools’ trading positions in futures contracts or other related investments are typically required to be secured by the deposit of margin funds that represent only a small percentage of a futures contract’s (or other commodity interest’s) entire market value.

Although permitted to do so under its Limited Partnership Agreement, USL has not and does not intend to leverage its assets and makes its investments accordingly.

Consistent with the foregoing, USL’s announced investment intentions noted above, and any changes thereto, will take into account the need for USL to make permitted investments that also allow it to maintain adequate liquidity to meet its margin and collateral requirements and to avoid, to the extent reasonably possible, USL becoming leveraged.

Although permitted to do so under its LP Agreement, USL has not leveraged, and does not intend to leverage, its assets through borrowings or otherwise, and makes its investments accordingly.

Consistent with the foregoing, USL’s investments will take into account the need for USL to maintain adequate liquidity to meet its margin and collateral requirements and to avoid, to the extent reasonably possible, USL becoming leveraged.

If market conditions require it, these risk reduction procedures may occur on short notice if they occur other than during a roll or rebalance period.

USL does not and will not borrow money or use debt to satisfy its margin or collateral obligations in respect of its investments, but it could become leveraged if USL were to hold insufficient assets that would allow it to meet not only the current, but also future, margin or collateral obligations required for such investments.

Such a circumstance could occur if USL were to hold assets that have a value of less than zero.

Borrowings are not used by USL, unless USL is required to borrow money in the event of physical delivery, if USL trades in cash commodities, or for short-term needs created by unexpected redemptions.

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To reduce the credit risk that arises in connection with such contracts, USL will generally enter into an agreement with each counterparty based on the Master Agreement published by the International Swaps and Derivatives Association, Inc.

(“ISDA”) that provides for the netting of its overall exposure to its counterparty.

(“ISDA”) that provides for the netting of its overall exposure to its counterparty and requires the posting by each party to cover the mark-to-market exposure of a counterparty to the other counterparty.

USCF assesses or reviews, as appropriate, the creditworthiness of each potential or existing counterparty to an OTC contract pursuant to guidelines approved by USCF’s Board.

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USL would use a spread when it chooses to take simultaneous long and short positions in futures written on the same underlying asset, but with different delivery months.

During the reporting period of this annual report on Form 10-K, USL limited its derivatives activities to Oil Futures Contracts and EFRP transactions.

During the reporting period of this annual report on Form 10-K, USL has limited its OTC activities to Oil Futures Contracts and EFRP transactions.

USL has not employed and will not employ the technique, commonly known as pyramiding, in which the speculator uses unrealized profits on existing positions as variation margin for the purchase or sale of additional positions in the same or another commodity interest.

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USCF pays the fees of BNY Mellon for its services under the BNY Mellon Agreements and such fees are determined by the parties from time to time.

Brown Brothers Harriman and Co.

(“BBH&Co.”) previously served as the Administrator, Custodian, Transfer Agent and Fund Accounting Agent for USL and the Related Public Funds prior to BNY Mellon commencing such services on April 1, 2020.

Certain fund accounting and fund administration services rendered by BBH&Co.

to USL and the Related Public Funds terminated on May 31, 2020 to allow for the transition to BNY Mellon.

Marketing Agent

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Payments to Certain Third Parties

USCF or the Marketing Agent, or an affiliate of USCF or the Marketing Agent, may directly or indirectly make cash payments to certain broker-dealers for participating in activities that are designed to make registered representatives and other professionals more knowledgeable about exchange-traded funds and exchange-traded products, including USL and the Related Public Funds, or for other activities, such as participation in marketing activities and presentations, educational training programs, conferences, the development of technology platforms and reporting systems.

activities, such as participation in marketing activities and presentations, educational training programs, conferences, the development of technology platforms and reporting systems.

Additionally, pursuant to written agreements, USCF may make payments, out of its own resources, to financial intermediaries in exchange for providing services in connection with the sale or servicing of USL’s shares, including waiving commissions on the purchase or sale of shares of participating exchange-traded products.

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In accordance with the settlement offer, the Panel ordered RBC Capital to pay a $175,000 fine.

On October 1, 2019, the CFTC issued an order filing and settling charges against RBCCM for the above activity, as well as related charges.

The order required that RBCCM cease and desist from violating the applicable regulations, pay a $5 million civil monetary penalty, and comply with various conditions, including conditions regarding public statements and future cooperation with the CFTC.

On October 1, 2019, the CFTC issued an order filing and settling charges against RBC Capital for the above activity, as well as related charges.

The order required that RBC Capital cease and desist from violating the applicable regulations, pay a $5 million civil monetary penalty, and comply with various conditions, including conditions regarding public statements and future cooperation with the CFTC.

Various regulators are conducting inquiries regarding potential violations of antitrust law by a number of banks and other entities, including RBC Capital, regarding foreign exchange trading.

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District Court dismissed RBC Capital from the opt-out action, but granted the plaintiffs’ motion to amend the complaint.

Canadian class actions remain pending and RBC Capital has reached a settlement for an immaterial amount with respect to an action brought by a class of indirect purchasers.

The Canadian class actions remain pending and RBC Capital has reached a settlement for an immaterial amount with respect to an action brought by a class of indirect purchasers.

RBC Capital is awaiting the court’s final approval of the settlement.

In October 2020, RBC Capital and Royal Bank of Canada moved to dismiss the amended complaint.

On July 28, 2021, the court dismissed Royal Bank of Canada from the case but denied the motion as to RBC.

On July 28, 2021, the court dismissed Royal Bank of Canada from the case but denied the motion as to RBC Capital.

Based on the facts currently known, it is not possible at this time for management to predict the ultimate outcome of these collective matters or the timing of their ultimate resolution.

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Therefore, neither USCF nor USL believes that there are any conflicts of interest with RBC Capital or its trading principals arising from its acting as USL’s FCM.

Marex North America, LLC

On May 28, 2020, USL entered into a Commodity Futures Customer Agreement with RCG Division of Marex Spectron, now Marex North America, LLC (“MNA”) to serve as a FCM for USL.

This agreement requires MNA to provide services to USL in connection with the purchase and sale of Oil Futures Contracts and other Oil-Related Investments which may be purchased or sold by or through MNA for USL’s account.

Under this agreement, USL pays MNA commissions for executing and clearing trades on behalf of USL.

MNA’s primary address is 360 Madison Avenue, 3rd Floor, New York, NY 10017.

MNA is registered in the United States with FINRA as a broker-dealer and with the CFTC as an FCM.

MNA is a member of various U.S.

futures and securities exchanges.

MNA is a large broker dealer subject to many different complex legal and regulatory requirements.

As a result, certain of MNA’s regulators may from time to time conduct investigations, initiate enforcement proceedings and/or enter into settlements with MNA with respect to issues raised in various investigations.

MNA complies fully with its regulators in all investigations which may be conducted and in all settlements it may reach.

MNA settled with the CFTC in September 2020 to pay a monetary penalty of $250,000 for failure to meet minimum adjusted net capital requirements.

MNA improperly accounted for deductions arising out of an agreement that it entered to guarantee a revolving line of credit for an affiliated company when computing its net capital requirement.

MNA will act only as clearing broker for USL and as such will be paid commissions for executing and clearing trades on behalf of USL.

MNA has not passed upon the adequacy or accuracy of this annual report on Form 10-K.

MNA will not act in any supervisory capacity with respect to USCF or participate in the management of USCF or USL.

MNA is not affiliated with USL or USCF.

Therefore, neither USCF nor USL believes that there are any conflicts of interest with MNA or its trading principals arising from its acting as USL’s FCM.

E D & F Man Capital Markets Inc.

On June 5, 2020, USL entered into a Customer Agreement E D & F Man Capital Markets Inc.

Marex Capital Markets, Inc., formerly E D & F Man Capital Markets Inc.

On June 5, 2020, USL entered into a Customer Account Agreement with E D & F Man Capital Markets Inc.

(“MCM”) to serve as an FCM for USL.

This agreement requires MCM to provide services to USL in connection with the purchase and sale of Oil Futures Contracts and Other Oil-Related Investments that may be purchased or sold by or through MCM for USL’s account.

Under this agreement, USL pays MCM commissions for executing and clearing trades on behalf of USL.

On July 14, 2023, this Customer Account Agreement was terminated and replaced by a Customer Account Agreement between USL and Marex North America, LLC (“MNA”) dated May 28, 2020, in respect of which MCM assumed the rights and obligations of MNA vis-à-vis USL following the transfer of MNA’s futures clearing business to MCM as part of an internal reorganization.

MCM’s primary address is 140 East 45th Street, 10th Floor, New York, NY 10017.

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As of the date hereof, MCM has no material litigation to disclose as that term is defined under the CEA and the regulations promulgated thereunder.

MCM was acquired by the Marex Group in phases during the second half of 2022 and went from doing business as E D & F Man Capital Markets, Inc.

to Marex Capital Markets, Inc.

MCM will act only as clearing broker for USL and as such will be paid commissions for executing and clearing trades on behalf of USL.

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Therefore, neither USCF nor USL believes that there are any conflicts of interest with MFUSA or its trading principals arising from its acting as USL’s FCM.

ADM Investor Services, Inc.

On August 8, 2023, USL and ADM Investor Services, Inc.

(“ADMIS”) entered into a Customer Account Agreement pursuant to which ADMIS has agreed to serve as an additional FCM for USL.

The Customer Account Agreement between USL and ADMIS requires ADMIS to provide services to USL in connection with the purchase and sale of futures contracts that may be purchased or sold by or through ADMIS for USL’s account.

Under this agreement, USL has agreed to pay ADMIS commissions for executing and clearing trades on behalf of USL.

ADMIS’s primary address is 141 W Jackson Boulevard, Suite 2100a, Chicago, IL 60604.

ADMIS is registered in the United States with the CFTC as an FCM providing futures execution and clearing services covering futures exchanges globally.

ADMIS is a member of various U.S.

futures and securities exchanges.

In the normal course of its business, ADMIS is involved in various legal actions incidental to its commodities business.

None of these actions are expected either individually or in aggregate to have a material adverse impact on ADMIS.

Neither ADMIS nor any of its principals have been the subject of any material administrative, civil or criminal actions within the past five years, except for the following matters.

In an Order entered on July 12, 2019 the CFTC found that between December 2014 and September 24, 2017, ADMIS failed to diligently supervise the handling by its employees and agents of commodity interest accounts as well as the activities of its employees and agents relating to its business as an FCM in violation of CFTC Regulation 166.3.

The order imposed a civil monetary penalty of $250,000.

On January 28, 2020, a Commodity Exchange Business Conduct Committee Panel (“Panel”) found that between 2012 and 2018, ADMIS learned that one of its brokerage firm clients automatically offset omnibus account positions in futures contracts using the FIFO method and was misreporting its open positions.

The Panel found that ADMIS failed to require the client to provide accurate and timely owner and control information and continued to report inaccurate information regarding the ownership and control of the positions through May 2018 in violation of Exchange Rules 432.Q., 432.X., and 561.C.

Additionally, on multiple occasions continuing through May 2018, ADMIS provided the Exchange with inaccurate audit trail data provided by the client.

The Panel found that ADMIS violated Exchange Rule 536.B.2.

Finally, the Panel found that ADMIS failed to take effective measures to ensure the accuracy of its client’s purchase and sales data reporting and its responses to the Exchange, and failed to properly supervise employees.

The Panel therefore found that ADMIS violated Exchange Rule 432.W.

In accordance with an offer of settlement the Panel ordered ADMIS to pay a fine of $650,000.

In an order issued on September 29, 2022, the CFTC found that between December 2016 and September 2019, ADMIS failed to supervise its employees and agents in their handling of commodity interest accounts regarding the improper or fictitious trade transfer requests and their activities relating to its business as a registered FCM to ensure compliance with the Commodity Exchange Act and it Regulations, and to deter and detect wrongdoing in violation of CFTC Regulation 166.3.

The order imposed a civil monetary fine of $500,000.

ADMIS will act only as clearing broker for USL and as such will be paid commissions for executing and clearing trades on behalf of USL.

ADMIS has not passed upon the adequacy or accuracy of this annual report on Form 10 - K.

ADMIS will not act in any supervisory capacity with respect to USCF or participate in the management of USCF or USL.

ADMIS is not affiliated with USL or USCF.

Therefore, neither USCF nor USL believes that there are any conflicts of interest with ADMIS or its trading principals arising from its acting as USL’s FCM.

Commodity Trading Advisor

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all or substantially all of an investment in USL could be lost.

● COVID-19 and other infectious disease outbreaks could negatively affect the valuation and performance of USL’s investments.

● Infectious disease outbreaks like COVID-19 could negatively affect the valuation and performance of USL’s investments.

● An investment in USL may provide little or no diversification benefits.

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● An investment in USL is not a proxy for investing in the oil markets, and the daily percentage changes in the price of the Benchmark Oil Future Contracts, or the NAV of USL, may not correlate with daily percentage changes in the spot price of crude oil.

● Accountability levels, position limits, and daily price fluctuation limits set by the exchanges have the potential to cause tracking error, by limiting USL’s investments, including its ability to fully invest in the Benchmark Oil Futures Contract, which could cause the price of shares to substantially vary from the average of the prices of the Benchmark Oil Futures Contract.

● Accountability levels, position limits, and daily price fluctuation limits set by the exchanges have the potential to cause tracking error, by limiting USL’s investments, including its ability to fully invest in the Benchmark Oil Futures Contract, which means that changes in the price of shares could substantially vary from the changes in the price of the Benchmark Oil Futures Contract.

● Risk mitigation measures imposed by USL’s FCMs have the potential to cause tracking error by limiting USL’s investments, including its ability to fully invest in the Benchmark Oil Futures Contracts and other Oil Futures Contracts, which means that the changes in the price of USL’s shares to substantially vary from changes in the price of the Benchmark Oil Futures Contracts.

● An investor’s tax liability may exceed the amount of distributions, if any, on its shares.

● An investor’s allocable share of taxable income or loss may differ from its economic income or loss on its shares.

● Items of income, gain, deduction, loss and credit with respect to shares could be reallocated, and USL could be liable for U.S.

● Items of income, gain, deduction, loss and credit with respect to shares could be reallocated for U.S.

federal income tax purposes, and USL could be liable for U.S.

federal income tax, if the U.S.

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shareholders, the cost of such withholding may be borne by all shareholders.

● The impact of U.S.

tax reform on USL is uncertain.

● The impact of changes in U.S.

federal income tax laws on USL is uncertain.

● USL will be subject to credit risk with respect to counterparties to OTC contracts entered into by USL or held by special purpose or structured vehicles.

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Compensation Paid by USCF

BBH&Co., Custodian and Administrator (3)

Minimum amount of $75,000 annually for its custody, fund accounting and fund administration services rendered to all funds, as well as a $20,000 annual fee for its transfer agency services.

In addition, an asset-based charge of (a) 0.06% for the first $500 million of USL’s and the Related Public Funds’ combined net assets, (b) 0.0465% for USL’s and the Related Public Funds’ combined net assets greater than $500 million but less than $1 billion, and (c) 0.035% once USL’s and the Related Public Funds’ combined net assets exceed $1 billion.

BNY Mellon, Custodian and Administrator (2)

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USCF pays this compensation.

The annual minimum amount will not apply if the asset-based charge for all accounts in the aggregate exceeds $75,000.

USCF also will pay transaction charge fees to BBH&Co., ranging from $7 to $15 per transaction for the funds.

provided certain fund accounting and fund administration services to USL through May 31, 2020.

BNY Mellon has served as the Custodian and Administrator of USL since April 1, 2020.

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charges may vary

Marex North America, LLC, Futures Commission Merchant

E D & F Man Capital Markets Inc., Futures Commission Merchant

MFUSA, Futures Commission Merchant

Marex Capital Markets, Inc., Futures Commission Merchant

ADMIS, Futures Commission Merchant

USL pays this compensation.

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These fees were approximately $90,864 for the fiscal year ended December 31, 2023.

In addition, USL is responsible for paying its portion of the directors’ and officers’ liability insurance for USL and the Related Public Funds and the fees and expenses of the independent directors who also serve as audit committee members of USL and the Related Public Funds.

In addition, USL is responsible for

paying its portion of the directors’ and officers’ liability insurance for USL and the Related Public Funds and the fees and expenses of the independent directors who also serve as audit committee members of USL and the Related Public Funds.

USL shares the fees and expenses on a pro rata basis with each Related Public Fund, as described above, based on the relative assets of each fund computed on a daily basis.

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Shareholders are limited to:

(1) participants in DTC such as banks, brokers, dealers and trust companies (“DTC Participants”), (2) those who maintain, either directly or indirectly, a custodial relationship with a DTC

Participant (“Indirect Participants”), and (3) those banks, brokers, dealers, trust companies and others who hold interests in the shares through DTC Participants or Indirect Participants, in each case who satisfy the requirements for transfers of shares.

(1) participants in DTC such as banks, brokers, dealers and trust companies (“DTC Participants”), (2) those who maintain, either directly or indirectly, a custodial relationship with a DTC Participant (“Indirect Participants”), and (3) those banks, brokers, dealers, trust companies and others who hold interests in the shares through DTC Participants or Indirect Participants, in each case who satisfy the requirements for transfers of shares.

DTC Participants acting on behalf of investors holding shares through such participants’ accounts in DTC will follow the delivery practice applicable to securities eligible for DTC’s Same-Day Funds Settlement System.

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DTC has advised USL as follows:

It is a limited purpose trust company organized under the laws of the State of New York and is a member of the Federal Reserve System, a “clearing corporation” within the meaning of the New York Uniform Commercial Code and a “clearing agency” registered pursuant to the provisions of Section 17A of the Exchange Act.

DTC is a limited purpose trust company organized under the laws of the State of New York and is a member of the Federal Reserve System, a “clearing corporation” within the meaning of the New York Uniform Commercial Code and a “clearing agency” registered pursuant to the provisions of Section 17A of the Exchange Act.

DTC holds securities for DTC Participants and facilitates the clearance and settlement of transactions between DTC Participants through electronic book-entry changes in accounts of DTC Participants.

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In addition, in order to provide updated information relating to USL for use by investors and market professionals, the NYSE Arca calculates and disseminates throughout the core trading session on each trading day an updated indicative fund value.

The indicative fund value is calculated by using the prior day’s closing per share NAV of USL as a base and updating that value throughout the trading day to reflect changes in the most recently reported trade price for the active light, sweet Oil Futures Contracts on the NYMEX.

The indicative fund value is calculated by using the prior day’s closing per share NAV of USL as a base and updating that value throughout the trading

day to reflect changes in the most recently reported trade price for the active light, sweet Oil Futures Contracts on the NYMEX.

The prices reported for those Oil Futures Contract months are adjusted based on the prior day’s spread differential between settlement values for the relevant contract and the spot month contract.

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During such gaps in time, the indicative fund value will be calculated based on the end of day price of such Oil Futures Contracts from the NYMEX’s immediately preceding trading session.

In addition, other Oil Futures Contracts, Other Oil-Related Investments and Treasuries held by USL will be valued by the Administrator, using rates and points received from client-approved third party vendors (such as Reuters and WM Company) and advisor quotes.

In addition, other Oil Interests and Treasuries held by USL will be valued by the Administrator, using rates and points received from client-approved third party vendors (such as Reuters and WM Company) and advisor quotes.

These investments will not be included in the indicative fund value.

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Because orders to purchase baskets must be placed by 12:00 p.m., New York time, but the total payment required to create a basket during the continuous offering period will not be determined until after 4:00 p.m., New York time, on the date the purchase order is received, Authorized Participants will not know the total amount of the payment required to create a basket at the time they submit an irrevocable purchase order for the basket.

USL’s NAV and the total amount of the payment required to create a basket could rise or fall substantially between the time an irrevocable purchase order is submitted and the time the amount of the purchase price in respect thereof is determined.

USL’s per share NAV and the total amount of the payment required to create a basket could rise or fall substantially between the time an irrevocable purchase order is submitted and the time the amount of the purchase price in respect thereof is determined.

Rejection of Purchase Orders

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Pursuant to information from USCF, the Custodian will also be authorized to deliver the redemption distribution notwithstanding that the baskets to be redeemed are not credited to USL’s DTC account by 3:00 p.m.

York time on the second business day following the redemption order date if the Authorized Participant has collateralized its obligation to deliver the baskets through DTC’s book entry-system on such terms as USCF may from time to time determine.

New York time on the second business day following the redemption order date if the Authorized Participant has collateralized its obligation to deliver the baskets through DTC’s book entry-system on such terms as USCF may from time to time determine.

Suspension or Rejection of Redemption Orders

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For example, USCF may determine that it is necessary to suspend redemptions to allow for the orderly liquidation of USL’s assets at an appropriate value to fund a redemption.

If USCF has difficulty liquidating its positions, e.g., because of a market disruption event in the futures markets, a suspension of trading by the exchange where the futures contracts are listed or an unanticipated delay in the liquidation of a position in an OTC contract, it may be appropriate to suspend redemptions until such time as such circumstances are rectified.

If USCF has difficulty liquidating USL’s positions, e.g., because of a market disruption event in the futures markets, a suspension of trading by the exchange where the futures contracts are listed or an unanticipated delay in the liquidation of a position in an OTC contract, it may be appropriate to suspend redemptions until such time as such circumstances are rectified.

None of USCF, the Marketing Agent, the Administrator, or the Custodian will be liable to any person or in any way for any loss or damages that may result from any such suspension or postponement.

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An Authorized Participant is under no obligation to create or redeem baskets, and an Authorized Participant is under no obligation to offer to the public shares of any baskets it does create.

Authorized Participants that do offer to the public shares from the baskets they create will do so at per-share offering prices that are expected to reflect, among other factors, the trading price of the shares on the NYSE Arca, the NAV of USL at the time the Authorized Participant purchased the Creation Baskets and the NAV of the shares at the time of the offer of the shares to the public, the supply of and demand for shares at the time of sale, the liquidity of the Oil Futures Contract market and the market for Other Oil-Related Investments.

The prices of shares offered by Authorized Participants are expected to fall between USL’s NAV and the trading price of the shares on the NYSE Arca at the time of sale.

Shares initially comprising the same basket but offered by Authorized Participants to

the public at different times may have different offering prices.

Authorized Participants that do offer to the public shares from the baskets they create will do so at per-share offering prices that are expected to reflect, among other factors, the trading price of the shares on the NYSE Arca, the per share NAV of USL at the time the Authorized Participant purchased the Creation Baskets and the per share NAV of the shares at the time of the offer of the shares to the public, the supply of and demand for shares at the time of sale, the liquidity of the Oil Futures Contract market and the market for Other Oil-Related Investments.

Shares initially comprising the same basket but offered by Authorized Participants to the public at different times may have different offering prices.

An order for one or more baskets may be placed by an Authorized Participant on behalf of multiple clients.

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The amount of the discount or premium in the trading price relative to the NAV per share may be influenced by various factors, including, among other things, the number of investors who seek to purchase or sell shares in the secondary market and the liquidity of the Oil Futures Contracts market and the market for Other Oil-Related Investments.

While the shares trade during the core trading session on the NYSE Arca until 4:00 p.m.

In addition, while USL’s shares trade during the core trading session on the NYSE Arca until 4:00 p.m.

New York time, liquidity in the market for Oil Interests may be reduced after the close of the NYMEX at 2:30 p.m.

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When USL purchases an Oil Futures Contracts and certain exchange-traded Other Oil-Related Investments, USL is required to deposit typically 5% to 30% with the selling FCMs on behalf of the exchange a portion of the value of the contract or other interest as security to ensure payment for the obligation under Crude Oil Interests at maturity.

However, from time to time, the percentage of assets committed as margin may be substantially more, or less, than such range.

This deposit is known as initial margin.

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● held in bank accounts to pay current obligations and as reserves.

Approximately 5% to 30% of USL’s assets have normally been committed as margin for commodity futures contracts.

However, from time to time, the percentage of assets committed as margin may be substantially more, or less, than such range.

An FCM, counterparty, government agency or commodity exchange could increase margin or collateral requirements applicable to USL to hold trading positions at any time.

The percentage of assets committed as margin may be substantially more, or less, than 5% to 30% range described above.

Ongoing margin and collateral payments will generally be required for both exchange-traded and OTC contracts based on changes in the value of the Crude Oil Interests.

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All interest income will be used for USL’s benefit.

USCF invests the balance of USL’s assets not invested in Crude Oil Interests or held in margin as reserves to be available for changes in margin.

All interest income is used for USL’s benefit.

The assets of USL posted as margin for Oil Futures Contracts are held in segregated accounts pursuant to the CEA and CFTC regulations.

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The CEA provides for varying degrees of regulation of commodity interest transactions depending upon:

(1) the type of instrument being traded (e.g., contracts for future

delivery, forwards, options, swaps or spot contracts), (2) the type of commodity underlying the instrument (distinctions are made between instruments based on agricultural commodities, energy and metals commodities and financial commodities), (3) the nature of the parties to the transaction (e.g., retail or eligible contract participant), (4) whether the transaction is entered into on a principal-to-principal or intermediated basis, (5) the type of market on which the transaction occurs, and (6) whether the transaction is subject to clearing through a clearing organization.

(1) the type of instrument being traded (e.g., contracts for future delivery, forwards, options, swaps or spot contracts), (2) the type of commodity underlying the instrument (distinctions are made between instruments based on agricultural commodities, energy and metals commodities and financial commodities), (3) the nature of the parties to the transaction (e.g., retail or eligible contract participant), (4) whether the transaction is entered into on a principal-to-principal or intermediated basis, (5) the type of market on which the transaction occurs, and (6) whether the transaction is subject to clearing through a clearing organization.

The offer and sale of shares of USL, as well as shares of each Related Public Fund, is registered under the 1933 Act.

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The CEA authorizes the CFTC to regulate trading by FCMs and by their officers and directors, permits the CFTC to require action by exchanges in the event of market emergencies, and establishes an administrative procedure under which customers may institute complaints for damages arising from alleged violations of the CEA.

The regulations of the CFTC and the NFA prohibit any representation by a person registered with the CFTC or by any member of the NFA, that registration with the CFTC, or membership in the NFA, in any respect indicates that the CFTC or the NFA, as the case may

be, has approved or endorsed that person or that person’s trading program or objectives.

The registrations and memberships of the parties described in this summary must not be considered as constituting any such approval or endorsement.

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Futures Contracts and Position Limits

On October 15, 2020, the CFTC approved a Position Limits Rule.

The Benchmark Oil Futures Contract will be subject to position limits under the Position Limits Rule, and USL’s trading does not qualify for an exemption therefrom.

The Benchmark Oil Futures Contracts are subject to position limits under the Position Limits Rule, and USL’s trading does not qualify for an exemption therefrom.

Accordingly, the Position Limits Rule could negatively impact the ability of USL to meet its investment objective by inhibiting USCF’s ability to effectively invest the proceeds from sales of Creation Baskets of USL in particular amounts and types of its permitted investments.

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Brokerage firms, such as USL’s clearing brokers, carrying accounts for traders in commodity interest contracts may not accept lower, and generally require higher, amounts of margin as a matter of policy to further protect themselves.

The clearing brokers require USL

to make margin deposits equal to exchange minimum levels for all commodity interest contracts.

The clearing brokers require USL to make margin deposits equal to exchange minimum levels for all commodity interest contracts.

This requirement may be altered from time to time in the clearing brokers’ discretion.

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Accordingly, USL will be subject to the variation margin requirements of the Margin Rules for any swaps that it enters into.

However, USL does not have material swaps exposure and, accordingly, no will not be subject to the initial margin requirements of the Margin Rules.

However, USL does not have material swaps exposure and, accordingly, will not be subject to the initial margin requirements of the Margin Rules.

Mandatory Trading and Clearing of Swaps

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business