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USO, a Delaware limited partnership, is a commodity pool that issues shares that may be purchased and sold on the NYSE Arca.
−Removed: The investment objective of USO is for the daily changes in percentage terms of its shares’ per share NAV to reflect the daily changes in percentage terms of the spot price of light, sweet crude oil delivered to Cushing, Oklahoma, as measured by the daily changes in the price of the futures contract for light, sweet crude oil traded on the NYMEX that is the near month contract to expire and changes, over a ten-day period, into the NYMEX futures contract that is the next month to expire (the “Benchmark Oil Futures Contract”), plus interest earned on USO’s collateral holdings, less USO’s expenses.The change from the near month contract to the next month contract occurs at the beginning of each month and will be approximately proportional, relative to total net assets, over each day of the ten-day roll period.
+Added: The investment objective of USO is for the daily changes in percentage terms of its shares’ per share NAV to reflect the daily changes in percentage terms of the spot price of light, sweet crude oil delivered to Cushing, Oklahoma, as measured by the daily changes in the price of the futures contract for light, sweet crude oil traded on the NYMEX that is the near month contract to expire and changes, over a ten-day period, into the NYMEX futures contract that is the next month to expire (the “Benchmark Oil Futures Contract”), plus interest earned on USO’s collateral holdings, less USO’s expenses.
+Added: The change from the near month contract to the next month contract occurs at the beginning of each month and will be approximately proportional, relative to total net assets, over each day of the ten-day roll period.
“Near month contract” means the next contract traded on the NYMEX due to expire.
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USO invests primarily in futures contracts for light, sweet crude oil, other types of crude oil, heating oil, gasoline, natural gas and other petroleum-based fuels that are traded on the NYMEX, ICE Futures or other U.S.
−Removed: 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 OTC swaps 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”).
+Added: and foreign exchanges (collectively, “Oil Futures Contracts”) and to a lesser extent, in order to comply with regulatory requirements, risk mitigation measures (including those that may be taken by USO, USO’s FCMs, counterparties or other market participants), 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 OTC swaps 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”).
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.
−Removed: USO is currently invested in Oil Futures Contracts in months other than the Benchmark Oil Futures Contract.
−Removed: This has impacted the performance of USO and its ability meet its investment objective within as narrow a percentage difference between the average daily percentage change in USO’s NAV for any period of 30 successive valuation days and the average daily percentage change in the price of the Benchmark Oil Futures Contract as it typically had prior to the Spring of 2020.
−Removed: Following the significant market volatility that occurred in the Spring of 2020 and the market conditions, regulatory requirements and risk mitigation measures taken by USO and USO’s FCM that impacted USO as a result thereof, USO previously disclosed the parameters for making decisions regarding the permitted investments USO would hold, including the intended order of priority in selecting investments and the type of investments to be held in its portfolio.
−Removed: Beginning with the monthly roll in September 2023 and ending with the monthly roll in January 2024, USO began transitioning its investment portfolio so that it primarily invests in Benchmark Oil Futures Contracts, consistent with USO’s investment strategy prior to the Spring of 2020.
−Removed: However, USO has had, and will continue to have, the ability to invest in Oil Futures Contracts beyond the Benchmark Oil Futures Contract and Other Oil-Related Investments, such as OTC swaps, and USO may make such investments if market conditions, regulatory requirements, risk mitigation measures (including those that may be taken by USO, USO’s FCMs, counterparties or other market participants), liquidity requirements, or other factors require USO to do so in order to meet its investment objective.
−Removed: USO may invest in Oil Futures Contracts beyond the Benchmark Oil Futures Contract, and/or Other Oil-Related Investments, as a result or in response to any of the foregoing factors.
USO’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 USO’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.
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Such volatility was attributable to the COVID-19 pandemic, related supply chain disruptions and disputes among oil-producing countries over the potential limits on the production of crude oil, and a corresponding collapse in demand for crude oil and a lack of on-land storage for crude oil.
−Removed: Certain circumstances resulting from such volatility caused USO to invest in Oil Futures Contracts other than the Benchmark Oil Futures Contract.
−Removed: In 2020, significant market volatility occurred in the crude oil markets and the oil futures markets.
−Removed: Such volatility was attributable in part to the COVID-19 pandemic, related supply chain disruptions and ongoing disputes among oil-producing countries over the potential limits on the production of crude oil, and a corresponding collapse in demand for crude oil and a lack of on-land storage for crude oil.
+Added: Certain circumstances, including the market conditions, regulatory requirements, and risk mitigation measures imposed by its FCMs, resulting from such volatility caused, as discussed below, USO to invest in Oil Futures Contracts other than the Benchmark Oil Futures Contract and to invest in Other Oil-Related Investments, such as swap transactions based on the price of oil.
These conditions severely limited USO’s ability to have a substantial portion of its assets invested in the Benchmark Oil Futures Contract and certain other Oil Futures Contracts of the same month, such as cash-settled, but substantially similar, oil futures contracts traded on ICE Futures (the “ICE WTI Contract”).
−Removed: Accordingly, USO invested, and since then has continued to invest, in other permitted Oil Futures Contracts with expirations in later months than the Benchmark Oil Futures Contract.
−Removed: USO also invested, and has continued to invest, in other permitted investments, including Other Oil-Related Investments, including OTC swaps.
+Added: Accordingly, USO invested in other permitted Oil Futures Contracts with expirations in later months than the Benchmark Oil Futures Contract.
+Added: USO also invested in other permitted investments, including Other Oil-Related Investments, including OTC swaps.
In addition, during the Spring of 2020, USO had to rebalance and adjust the types of holdings in its portfolio more frequently than it had in the past.
−Removed: Beginning with the monthly roll in September 2023 and ending with the monthly roll in January 2024, USO began transitioning its investment portfolio so that it primarily invests in Benchmark Oil Futures Contracts, consistent with USO’s investment strategy prior to the Spring of 2020.
−Removed: However, USO has had, and will continue to have, the ability to invest in Oil Futures Contracts beyond the Benchmark Oil Futures Contract and Other Oil-Related Investments, such as OTC swaps, and USO may make such investments if market conditions, regulatory requirements, risk mitigation measures (including those that may be taken by USO, USO’s FCMs, counterparties or other market participants), liquidity requirements, or other factors require USO to do so in order to meet its investment
+Added: Beginning with the monthly roll in September 2023 and ending with the monthly roll in January 2024, USO transitioned its investment portfolio and now primarily invests in Benchmark Oil Futures Contracts, consistent with USO’s investment strategy prior to the Spring of 2020.
+Added: However, USO has had, and will continue to have, the ability to invest in Oil Futures Contracts beyond the Benchmark Oil Futures Contract and Other Oil-Related Investments, such as OTC swaps, and USO may make such investments if market conditions, regulatory requirements, risk mitigation measures (including those that may be taken by USO, USO’s FCMs, counterparties or other market participants), liquidity requirements, or other factors require USO to do so in order to meet its investment objective.
USO may invest in Oil Futures Contracts beyond the Benchmark Oil Futures Contract, and/or Other Oil-Related Investments, as a result or in response to any of the foregoing factors.
+Added: In addition, USO may need to hold significant portions of its portfolio in cash beyond what it
+Added: has historically held for reasons including (but not limited to) the need to address the changes in market conditions, regulatory requirements or risk mitigation measures or the need to satisfy potential margin requirements.
+Added: Investments in Oil Futures Contracts beyond the Benchmark Oil Futures Contract and Other Oil-Related Investments could result in wider deviations between the performance of USO’s investments and the Benchmark Oil Futures Contract than if USO’s investments primarily consisted of the Benchmark Oil Futures Contract, and changes in USO’s share price may not be able to track changes in the price of the Benchmark Oil Futures Contract within as narrow a percentage change difference for any period of 30 successive valuation days as it would if USO’s investments primarily consisted of the Benchmark Oil Futures Contract.
Although permitted to do so under its LP Agreement, USO has not leveraged, and does not intend to leverage, its assets through borrowings or otherwise, and makes its investments accordingly.
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As of December 31, 2024, USO held 11,084 NYMEX WTI Crude Oil Futures CL contracts and did not hold any ICE WTI Crude Oil Futures contracts.
−Removed: USO exceeded accountability levels of the NYMEX during the year ended December 31, 2022, including when it held a maximum of 21,570 Crude Oil Futures CL contracts on the NYMEX, exceeding the “any” month limit.
+Added: USO exceeded accountability levels of the NYMEX during the year ended December 31, 2024, including when it held a maximum of 18,287 Crude Oil Futures CL contracts on the NYMEX, exceeding the “any one” month limit.
No action was taken by the NYMEX and USO did not have to reduce the number of positions held.
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The foregoing accountability levels and position limits are subject to change.
−Removed: Due to evolving market conditions, remaining within relevant accountability levels and position limits, and, any additional or different risk mitigation measures taken by USO’s FCMs in the future with respect to USO acquiring additional Oil Futures contracts, USO has invested and intends to invest in other permitted investments, beyond the Benchmark Oil Futures Contract.
+Added: Due to evolving market conditions, remaining within relevant accountability levels and position limits, and, any additional or different risk mitigation measures taken by USO’s FCMs in the future
+Added: with respect to USO acquiring additional Oil Futures contracts, USO has invested and intends to invest in other permitted investments, beyond the Benchmark Oil Futures Contract.
Federal Position Limits
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Accordingly, the Position Limits Rule could inhibit USO’s ability to invest in the Benchmark Oil Futures Contract and thereby could negatively impact the ability of USO to meet its investment objective.
+Added: USO has not limited the size of its offering and intends to utilize substantially all of its proceeds to purchase Oil Futures Contracts and Other Oil-Related Investments to the extent possible.
+Added: If USO encounters accountability levels, position limits (including those set by the Position Limits Rule), or price fluctuation limits for Oil Futures Contracts on the NYMEX or ICE Futures, it may then, if permitted under applicable regulatory requirements, purchase Oil Futures Contracts on other exchanges that trade listed crude oil futures or enter into swaps or other permitted investments to meet its investment objective.
+Added: In addition, if USO exceeds accountability levels on either the NYMEX or ICE Futures and is required by such exchanges to reduce its holdings, such reduction could potentially cause a tracking error between the price of USO’s shares and the price of the Benchmark Oil Futures Contract.
Margin for OTC Swaps
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Infectious disease outbreaks like COVID-19 could negatively affect the valuation and performance of USO’s investments.
−Removed: An outbreak of infectious respiratory illness caused by a novel coronavirus known as COVID-19 was first detected in China in December 2019 and spread globally.
−Removed: In March 2020, the World Health Organization declared the COVID-19 outbreak a pandemic.
−Removed: COVID-19 resulted in numerous deaths, travel restrictions, closed international borders, enhanced health screenings at ports of entry and elsewhere, disruption of and delays in healthcare service preparation and delivery, prolonged quarantines and the imposition of both local and more widespread “work from home” measures, cancellations, loss of employment, supply chain disruptions, and lower consumer and institutional demand for goods and services, as well as general concern and uncertainty.
−Removed: The spread of COVID-19 had a material adverse impact on local economies in the affected jurisdictions and also on the global economy, as cross border commercial activity and market sentiment were impacted by the outbreak and government and other measures seeking to contain its spread.
−Removed: COVID-19 had a material adverse impact on the crude oil markets and oil futures markets to the extent economic activity and the use of crude oil continues to be curtailed, which in turn had a significant adverse effect on the prices of Oil Futures Contracts, including the Benchmark Oil Futures Contracts, and Other Oil-Related Investments.
−Removed: Infectious disease outbreaks like COVID-19 may arise in the future and could adversely affect individual issuers and capital markets in ways that cannot necessarily be foreseen.
−Removed: In addition, actions taken by government and quasi-governmental authorities and regulators throughout the world in response to such an outbreak, including the potential for significant fiscal and monetary policy changes, may affect the value, volatility, pricing and liquidity of some investments or other assets, including those held by or invested in by USO.
+Added: Infectious disease outbreaks like the COVID-19 pandemic may arise in the future and could adversely affect USO and, more generally, individual issuers and capital markets, in ways that cannot necessarily be foreseen.
+Added: For example, COVID-19 resulted in numerous deaths, travel restrictions, closed international borders, enhanced health screenings at ports of entry and elsewhere, disruption of and delays in healthcare service preparation and delivery, prolonged quarantines and the imposition of both local and more widespread “work from home” measures, cancellations, loss of employment, supply chain disruptions, and lower consumer and institutional demand for goods and services, as well as general concern and uncertainty.
+Added: The COVID-19 pandemic that occurred in 2020 had a material adverse impact on local economies in the affected jurisdictions and also on the global economy, as cross border commercial activity and market sentiment were impacted by the outbreak and government and other measures seeking to contain COVID-19’s spread.
+Added: COVID-19 also had a material adverse impact on the oil markets and oil futures markets because economic activity and the use of oil were curtailed, which in turn had a significant adverse effect on the prices of Oil Futures Contracts, including the Benchmark Oil Futures Contracts, and Other Oil-Related Investments.
+Added: An infectious disease outbreak may arise in the future and could have the same or similar effects as the COVID-19 pandemic, or different effects that cannot be foreseen.
+Added: Moreover, as was the case with the COVID-19 pandemic, actions taken by government and quasi-governmental authorities and regulators throughout the world in response to an infectious disease outbreak, including the potential for significant fiscal and monetary policy changes, may affect the value, volatility, pricing and liquidity of some investments or other assets, including those held by or invested in by USO.
Public health crises caused by infectious disease outbreaks may exacerbate other pre-existing political, social and economic risks in certain countries or globally and their duration cannot be determined with certainty.
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The price of the Benchmark Oil Futures Contract started the year at $71.65 per barrel.
−Removed: The high of the year was on September 27, 2023 when the price reached $93.68 per barrel.
−Removed: The low for the year was on March 17, 2023, which was $66.93 per barrel.
−Removed: The year ended with the Benchmark Oil Futures Contract at $71.65 per barrel, a decrease of approximately (10.73)% over the year.
−Removed: USO’s per share NAV began the year at $70.05 and ended the year at $66.91 on December 31, 2023, a decrease of approximately (4.48)% over the year.
+Added: The high of the year was on April 5, 2024 when the price reached $86.59 per barrel.
+Added: The low for the year was on September 10, 2024, which was $64.45 per barrel.
+Added: The year ended with the Benchmark Oil Futures Contract at $71.72 per barrel, an increase of approximately 0.10% over the year.
+Added: USO’s per share NAV began the year at $66.91 and ended the year at $75.45 on December 31, 2024, an increase of approximately 12.76% over the year.
The Benchmark Oil Futures Contract prices listed above began with the February 2024 contracts and ended with the February 2025 contracts.
−Removed: The decrease of approximately (10.73)% on
−Removed: the Benchmark Oil Futures Contract listed above is a hypothetical return only and would not actually be realized by an investor holding Oil Futures Contracts.
+Added: The increase of approximately 0.10% on the Benchmark Oil Futures Contract listed above is a hypothetical return only and could not actually be achieved by an investor holding Oil Futures Contracts.
An investment in Oil Futures Contracts would need to be rolled forward during the time period described in order to simulate such a result.
Furthermore, the change in the nominal price of these differing Oil Futures Contracts, measured from the start of the year to the end of the year, does not represent the actual benchmark results that USO seeks to track, which are more fully described below in the section titled “Tracking USO’s Benchmark.
−Removed: During the year ended December 31, 2023, the crude oil futures market experienced states of both mild contango and strong backwardation.
+Added: During the year ended December 31, 2024, the crude oil futures market experienced states of both contango and backwardation.
On days when the market was in contango the price of the near month crude Oil Futures Contract was lower than the price of the next month crude Oil Futures Contract, or contracts further away from expiration.
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Results of Operations.
−Removed: On April 10, 2006, USO listed its shares on the AMEX under the ticker symbol “USO.” On that day, USO established its initial offering price at $67.39 per share and issued 200,000 shares to the initial Authorized Participant, KV Execution Services, LLC, in exchange for $13,479,000 in cash.
−Removed: As a result of the acquisition of the AMEX by NYSE Euronext, USO’s shares ceased trading on the AMEX and commenced trading on the NYSE Arca on November 25, 2008.
−Removed: As of December 31, 2023, USO had issued 4,809,200,000 shares, 23,423,603 of which were outstanding.
+Added: As of December 31, 2024, USO had issued 14,423,603 shares outstanding.
On August 29, 2023, the SEC declared effective a registration statement filed by USO that registered an unlimited number of shares.
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As of December 31, 2024, USO had the following Authorized Participants:
−Removed: ABN AMRO Clearing USA LLC, BNP Paribas Securities Corp., Citadel Securities LLC, Citigroup Global Markets Inc., Goldman Sachs & Company, JP Morgan Securities LLC, Merrill Lynch Professional Clearing Corp., Morgan Stanley & Company Inc., RBC Capital Markets LLC, SG Americas Securities LLC, UBS Securities LLC and Virtu Americas LLC.
+Added: ABN AMRO Clearing USA LLC, BNP Paribas Securities Corp., Citadel Securities LLC, Citigroup Global Markets Inc., Goldman Sachs & Company, Jane Street Capital LLC, JP Morgan Securities LLC, Merrill Lynch Professional Clearing Corp., Morgan Stanley & Company Inc., RBC Capital Markets LLC, SG Americas Securities LLC, UBS Securities LLC and Virtu Americas LLC.
For the Year Ended December 31, 2024 Compared to the Year Ended December 31, 2023
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The fee is accrued daily and paid monthly.
−Removed: The decrease in the per share NAV for the year ended December 31, 2023, compared to the year ended December 31, 2022, was due primarily to lower prices for WTI crude oil and the related decrease in the value of the Oil Futures Contracts and other Oil Interests in which USO held and traded.
+Added: The increase in the per share NAV for the year ended December 31, 2024, compared to the year ended December 31, 2023, was due primarily to higher prices for WTI crude oil and the related increase in the value of the Oil Futures Contracts in which USO held and traded.
Average interest rates earned on short-term investments held by USO, including cash, cash equivalents and Treasuries, were higher during the year ended December 31, 2024, compared to the year ended December 31, 2023.
As a result, the amount of income earned by USO as a percentage of average daily total net assets was higher during the year ended December 31, 2024, compared to the year ended December 31, 2023.
−Removed: To the degree that the aggregate yield is higher, the net expense ratio, inclusive of income, will be lower.
+Added: To the degree that the aggregate yield was higher, the net expense ratio, inclusive of income, will be lower.
The increase in total fees and other expenses excluding management fees for the year ended December 31, 2024, compared to the year ended December 31, 2023 was due primarily to an increase in tax reporting and professional fees.
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*PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS
−Removed: An alternative tracking measurement of the return performance of USO versus the return of its Benchmark Oil Futures Contract can be calculated by comparing the actual return of USO, measured by changes in its per share NAV, versus the expected changes in its per share NAV under the assumption that USO’s returns had been exactly the same as the daily changes in its Benchmark Oil Futures Contract.
+Added: An alternative tracking measurement of the return performance of USO versus the return of its Benchmark Oil Futures Contract can be calculated by comparing the actual return of USO, measured by changes in its per share NAV, versus the expected changes in its per
+Added: share NAV under the assumption that USO’s returns had been exactly the same as the daily changes in its Benchmark Oil Futures Contract.
For the year ended December 31, 2024, the actual total return of USO as measured by changes in its per share NAV was 12.76%.
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USO incurs expenses primarily composed of the management fee, brokerage commissions for the buying and selling of futures contracts, and other expenses.
−Removed: The impact of these expenses, offset by interest and dividend income, and net of positive or negative execution, and net the difference in returns between USO’s current holdings and the Benchmark Oil Futures Contract tended to cause daily changes in the per share NAV of USO to track slightly lower than daily changes in the price of the Benchmark Oil Futures Contract.
+Added: The impact of these expenses, offset by interest and dividend income, and net of positive or negative execution, and net the difference in returns between USO’s current holdings and the Benchmark Futures contract tended to cause daily changes in the per share NAV of USO to track slightly lower than daily changes in the price of the Benchmark Oil Futures Contract.
By comparison, for the year ended December 31, 2023, the actual total return of USO as measured by changes in its per share NAV was (4.48)%.
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USO incurs expenses primarily composed of the management fee, brokerage commissions for the buying and selling of futures contracts, and other expenses.
−Removed: The impact of these expenses, offset by interest and dividend income, and
−Removed: net of positive or negative execution, and net the difference in returns between USO’s current holdings and the Benchmark Futures contract tended to cause daily changes in the per share NAV of USO to track slightly higher than daily changes in the price of the Benchmark Oil Futures Contract.
+Added: The impact of these expenses, offset by interest and dividend income, and net of positive or negative execution, and net the difference in returns between USO’s current holdings and the Benchmark Futures contract tended to cause daily changes in the per share NAV of USO to track slightly higher than daily changes in the price of the Benchmark Oil Futures Contract.
As a result of market conditions and the regulatory response that occurred in March 2020 and thereafter, large numbers of USO shares that were purchased during a short period of time, and regulatory accountability levels and position limits on oil futures contracts that were imposed on USO, and risk mitigation measures imposed by its FCMs, USO invested in Oil Futures Contracts in months other than the Benchmark Oil Futures Contract.
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First, USO may buy or sell its holdings in the then current Benchmark Oil Futures Contract at a price other than the settlement price of that contract on the day during which USO executes the trade.
−Removed: In that case, USO may pay a price that is higher, or lower, than the closing settlement price of the Benchmark Oil Futures Contract, which could cause the changes in the daily per share NAV of USO to either be too high or too low relative to the daily changes in the Benchmark Oil Futures Contract.
+Added: In that case, USO may pay a price that is higher, or lower, than the closing settlement price of the Benchmark Oil Futures Contract, which could cause the changes in the daily per share NAV of USO to either be higher or lower relative to the daily changes in the Benchmark Oil Futures Contract.
During the year ended December 31, 2024, USCF attempted to minimize the effect of these transactions by seeking to execute its purchase or sale of Oil Futures Contracts at, or as close as possible to, the end of the day settlement price.
−Removed: However, it may not always be possible for USO to obtain the settlement price and there is no assurance that failure to obtain the closing settlement price in the future will not adversely impact USO’s attempt to track the Benchmark Oil Futures Contract.
+Added: However, it may not always be possible for USO to obtain the settlement price and
+Added: there is no assurance that failure to obtain the closing settlement price in the future will not adversely impact USO’s attempt to track the Benchmark Oil Futures Contract.
Second, USO incurs expenses primarily composed of the management fee, brokerage commissions for the buying and selling of futures contracts, and other expenses.
13 unchanged sentences
During the year ended December 31, 2024, USO held OTC swaps, which are considered Other Oil-Related Investments.
−Removed: If USO increases in size, and due to its obligations to comply with market conditions, regulatory limits, and risk mitigation measures imposed by its FCMs, USO may invest in additional Other Oil-Related Investments, such as OTC swaps, which may have the effect of increasing transaction related
−Removed: expenses and may result in increased tracking error.
+Added: If USO increases in size, and due to its obligations to comply with market conditions, regulatory limits, and risk mitigation measures imposed by its FCMs, USO may invest in additional Other Oil-Related Investments, such as OTC swaps, which may have the effect of increasing transaction related expenses and may result in increased tracking error.
OTC swaps increase transaction-related expenses due to the fact that USO must pay to the swap counterparty certain fees that USO does not have to pay for transactions executed on an exchange.
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If the futures market is in backwardation, e.g., when the price of the near month futures contract is higher than the price of the next month futures contract, the investor would buy a next month futures contract for a lower price than the current near month futures contract.
−Removed: Assuming the price of the next month futures contract was $49 per barrel, or 2% cheaper than the $50 near month futures contract, then, hypothetically, and assuming no other changes (e.g., to either prevailing crude oil prices or the price relationship between the spot price, the near month contract and the next month contract, and, ignoring the impact of commission costs and the income earned on cash and/or cash equivalents), the value of the $49 next month futures contract would rise to $50 as it approaches expiration.
+Added: Assuming the price of the next month futures contract was $49 per barrel, or 2% cheaper than the $50 near month futures
+Added: contract, then, hypothetically, and assuming no other changes (e.g., to either prevailing crude oil prices or the price relationship between the spot price, the near month contract and the next month contract, and, ignoring the impact of commission costs and the income earned on cash and/or cash equivalents), the value of the $49 next month futures contract would rise to $50 as it approaches expiration.
In this example, the value of an investment in the next month futures contract would tend to outperform the spot price of crude oil.
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In March 2020, contango dramatically increased and reached historic levels during the economic crisis arising from the COVID-19 pandemic, related supply chain disruptions and ongoing disputes among oil producing countries.
−Removed: This level of contango was due to significant market volatility that occurred in crude oil markets as well as oil futures markets.
+Added: This level of contango was due to
+Added: significant market volatility that occurred in crude oil markets as well as oil futures markets.
Crude oil prices collapsed in the wake of the COVID-19 demand shock, which reduced global petroleum consumption, and the price war launched by Saudi Arabia at the beginning of March 2020 in response to Russia’s unwillingness to participate in extending previously agreed upon supply cuts.
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The supply cut along with the partial reopening of economies during the third quarter of 2020 reduced some of the unprecedented volatility that oil markets experienced in the Spring of 2020.
−Removed: During the twelve months ended December 31, 2020, the crude oil futures market spent time in both a state of contango and backwardation as measured by the difference between the front month and the second month contract, whereas during the twelve months ended December 31, 2021, the crude oil futures market was primarily in a state of backwardation as measured by the difference between the front month and the second month contract.
−Removed: During the year ended December 31, 2022, the crude oil futures market experienced states of both contango and backwardation as measured by the difference between the front month and the second month contract, and during the twelve months ended December 31, 2023, the crude oil futures market also experienced states of both mild contango and strong backwardation.
−Removed: As a result of market and regulatory conditions, including significant market volatility, large numbers of USO shares purchased during a short period of time, applicable regulatory accountability levels and position limits on oil futures contracts and risk mitigation measures that were taken by USO and USO’s FCM in 2020, USO invested in, and continues to invest in, Oil Futures Contracts with expiration dates for months later than that of the Benchmark Oil Futures Contract.
+Added: During the twelve months ended December 31, 2020, the crude oil futures market spent time in both a state of contango and backwardation as measured by the difference between the front month and the second month contract, whereas the crude oil futures market has primarily been in a state of backwardation since 2021 as measured by the difference between the front month and the second month contract.
+Added: As a result of market and regulatory conditions, including significant market volatility, large numbers of USO shares purchased during a short period of time, applicable regulatory accountability levels and position limits on oil futures contracts and risk mitigation measures that were taken by USO and USO’s FCM in 2020, USO invested in Oil Futures Contracts with expiration dates for months later than that of the Benchmark Oil Futures Contract.
Holdings in later month contracts will typically cause USO to experience lesser effects from contango and backwardation than would be the case if USO’s holdings were primarily in oil futures contracts in the first month or second month.
−Removed: Beginning with the monthly roll in September 2023 and ending with the monthly roll in January 2024, USO’s intention is to begin transitioning its investment portfolio so that it will primarily invest in Benchmark Oil Futures Contracts, consistent with USO’s investment strategy prior to 2020.
+Added: Beginning with the monthly roll in September 2023 and ending with the monthly roll in January 2024, USO transitioned its investment portfolio and now primarily invests in Benchmark Oil Futures Contracts, consistent with USO’s investment strategy prior to 2020.
However, USO has had, and will continue to have, the ability to invest in Oil Futures Contracts beyond the Benchmark Oil Futures Contract and Other Oil-Related Investments, such as OTC swaps, and USO may make such investments if market conditions, regulatory requirements, risk mitigation measures (including those that may be taken by USO, USO’s FCMs, counterparties or other market participants), liquidity requirements, or other factors require USO to do so in order to meet its investment objective.
2 unchanged sentences
During the year ended December 31, 2024, the price of the front month WTI crude oil futures contract traded in a range between $65.75 to $86.91.
−Removed: Prices decreased (10.73)% from December 31, 2022 through December 31, 2023, finishing the year at $71.65.
−Removed: The simultaneous demand and supply shocks from the COVID-19 pandemic and Saudi-Russia price war precipitated unparalleled risk and volatility in crude oil markets during the first half of 2020.
−Removed: Global demand for crude oil plummeted by as much as 30% in the spring of 2020 as workers around the world stopped driving, airlines cut flight schedules, and companies suspended operations.
−Removed: Meanwhile, U.S.
−Removed: crude oil supply reached 13 million barrels per day (mbd), capping a period of almost continuous growth since 2016.
−Removed: To offset the seemingly unstoppable U.S.
−Removed: production juggernaut, OPEC+ (a loose coalition between OPEC and non-member nations such as Russia and Mexico) had maintained an uneasy series of agreements to curtail their crude oil output in order to support crude oil prices.
−Removed: However, in early March of 2020, Russia refused Saudi Arabia’s proposal to extend cuts in response to the COVID-19 demand shock.
−Removed: The kingdom retaliated with a massive production increase, launching an all-out price war in the middle of a pandemic.
−Removed: Although the members of OPEC+ reached a record-shattering agreement in mid-April of 2020, the implementation of new supply cuts came too late to prevent
−Removed: crude oil prices from plummeting to historic lows, culminating in a drop into negative territory for the May WTI crude oil futures contract on April 20, 2020.
−Removed: During the second quarter of 2020, the International Energy Agency (IEA) reported that crude oil demand fell an average of 16.4 mbd while global crude oil supply declined by an average of 13.7 mbd.
−Removed: Demand evaporated as a result of quarantines and massive drops in industrial and manufacturing activity.
−Removed: Supply declined largely due to the historic agreement in April of 2020 between the United States, OPEC, Russia, and other oil producers.
−Removed: The bulk of the supply decline came from voluntary OPEC+ cuts while 2.8 mbd resulted from market driven cuts in the United States.
−Removed: As of June 30, 2020, U.S.
−Removed: production had dropped over 15%, rapidly falling back to 11 mbd.
−Removed: Oil producing rigs in the United States fell to 180 from over 670 at the start of the year, a massive decline that will likely see U.S.
−Removed: supply fall further.
−Removed: Finally, in late June of 2020 storage in the U.S.
−Removed: spiked to 541 million barrels while global storage reached 3.351 billion barrels.
−Removed: The unprecedented twin crises described above caused unparalleled effects on oil futures markets during 2020.
−Removed: First, front month WTI Oil Futures Contract prices dipped below $20 for the first time since 2002 and hit an all-time closing low of $(37.63).
−Removed: Multiple record-breaking returns occurred between March and May of 2020.
−Removed: The price of the front month WTI Oil Futures Contract averaged $28 during the second quarter of 2020 compared to $46 during the first quarter of 2020 and $57 during calendar year 2019.
−Removed: Second, crude oil price volatility went off-the-charts.
−Removed: For example, the 30-day annualized volatility of front month WTI crude oil futures prices reached 984% in May 2020 after averaging 35% in 2019 and 25% in the first two months of 2020.
−Removed: (If May crude oil futures had not gone negative on April 20, 2020, volatility would “only” have reached 416%.)
−Removed: Third, futures curves, which can exhibit conditions known as “contango” and “backwardation” as discussed above, moved into a condition that some market experts referred to as “super contango.” This was a result of extreme bearishness at the front of the futures curve due to rapidly filling storage facilities in the U.S.
−Removed: and around the world.
−Removed: Specifically, the price of the front month WTI Oil Futures Contract detached from the rest of the futures curve and fell to an extreme position relative to futures contracts with expiration dates in later months.
−Removed: On a percentage basis, the difference in price between the front month WTI Oil Futures Contract and the second month WTI Oil Futures Contract was more than double the previous record.
−Removed: This divergence caused the price of WTI Oil Futures Contracts with different expiration dates to move in different directions.
−Removed: For example, the price of the front month WTI Oil Futures Contract and second month WTI Oil Futures Contract typically move together (i.e., increase or decrease) about 99% of the time.
−Removed: However, in late April of 2020, the correlation of the price of the front and second month WTI Oil Futures Contracts was (24)%, meaning that these contracts were moving in opposite directions.
−Removed: Fourth, USO, among other market participants, diversified its portfolio away from the front of the futures curve in favor of deferred contract months, as discussed in this Form 10-Q.
−Removed: The move by USO and other market participants to deferred contract months caused a historic change during 2020 to relative levels of open interest among the different futures contracts.
−Removed: For example, open interest in the front month futures contract fell an average of 40% during April, May, and June of 2020 compared to the average level of open interest during those same calendar months during the previous five years.
−Removed: As economies reopened and OPEC+ supply cuts were absorbed by the market, WTI crude oil prices rose from all-time lows in the spring of 2020 to an average of $68.00 per barrel during calendar year 2021.
−Removed: WTI crude oil inventories in the United States fell from a modern record of 541 mb in June 2020 to 418 mb by the end of the fourth quarter of 2021.
−Removed: Crude oil production in the United States fell below 10 mbd twice in 2020 and once in early 2021 after peaking at 13.1 mbd in March of 2020.
−Removed: production rose to 11.8 mbd by December 31, 2021.
−Removed: Similarly, OPEC production declined from over 30 mbd pre-COVID-19 to a pandemic low of 22.5 mbd before gradually recovering to 28.1 mbd by December 31, 2021.
−Removed: While the impact of the COVID-19 pandemic appears to have decreased, elevated risk from the pandemic remains in the oil markets until the current and future COVID-19 pandemic mitigation measures have fully subsided.
−Removed: Bullish fundamentals for crude oil prices were in place when Russia invaded Ukraine in February of 2022, causing the United States and other countries and certain international organizations to impose broad-ranging economic sanctions on Russia and certain Russian individuals, banking entities and corporations as a response.
−Removed: The war in Ukraine, sanctions and the corresponding disruption in the supply of Russian oil, resulted in significant volatility in the oil markets, particularly in early March when WTI crude oil briefly rose to over $123.70 per barrel on March 8, 2022 then fell back to $95.04 per barrel on March 16, 2022, before rising and the falling again to end the first quarter of 2022 at $100.28 per barrel.
−Removed: A bullish trend for crude oil emerged from mid-April through early June 2022 when WTI crude oil again topped $120 per barrel before, once again, giving up gains to end the fourth quarter of 2022 at $80.26.
−Removed: Crude oil prices struggled to find direction during the first half of 2023 with seventeen notable price reversals, most of which exceeded $5.
−Removed: Prices rose dramatically in the third quarter, from approximately $70 to over $90.
−Removed: This strong bull market completely reversed in the fourth quarter and by December crude had plunged back to the $70 to $75 range.
−Removed: crude oil production growth accelerated in late July and rose until the end of the year, finally surpassing pre-pandemic levels and reaching a record of 13.3 mbd in December.
−Removed: Global crude oil supply rose above demand during the fourth quarter of 2023.
−Removed: Russia and OPEC have still not returned to pre-pandemic production levels.
−Removed: OPEC has fiercely supported prices with voluntary cuts by and production quotas on member nations over the last several years.
−Removed: However, the November 2023 OPEC meeting was tumultuous and left the market uncertain of the cartel’s future commitment to cuts, despite an extension of voluntary cuts and expansion of collective curbs that amounted to 2.2 mbd until March 2024.
−Removed: Looking ahead, if OPEC’s strategic focus shifts from price support to market share defense, prices could come under further pressure.
−Removed: Conversely, demand for crude oil has slowly increased since the onset of the pandemic in 2020.
−Removed: According to the U.S.
−Removed: Department of Energy, crude oil consumption reached an all-time high at the end of 2023 and is expected to continue increasing in 2024.
−Removed: However, growth forecasts from the U.S.
−Removed: Energy Information Administration (EIA) and the International Energy Agency (IEA) have declined from more optimistic projections earlier in 2023.
−Removed: Nevertheless, ongoing demand growth during a time when OPEC continues to restrain supply could lead to stable or higher prices over time.
−Removed: Supply constraints, worker shortages, infrastructure and manufacturing energy usage, the Russia-Ukraine war, the terror attacks by Hamas on Israel and ensuing conflict in the Middle East, and other geopolitical tensions, political unrest, and attacks or threats of attack by terrorists, are other factors that could contribute to future increases in crude oil prices.
−Removed: Conversely, changes in OPEC policy, further non-OPEC production growth, and any sluggishness in the global economy could weigh on prices.
−Removed: Geopolitical risk is expected to be particularly high in 2024.
−Removed: The Russia-Ukraine war and Middle East conflict have the potential to create further supply disruptions and sanctions, which could lead to further volatility.
−Removed: However, if a resolution to the conflicts were to occur, volatility could decrease and prices could decline somewhat in a short period of time.
−Removed: Crude oil prices may also be highly reactive to developments as global buyers and sellers of crude reposition their relationships.
+Added: Prices increased 0.10% from December 31, 2023 through December 31, 2024, finishing the year at $71.72.
+Added: The early 2020’s witnessed extraordinary events in global financial markets, and crude oil offered no exception.
+Added: During the first half of 2020, simultaneous demand and supply shocks led to unparalleled risk and volatility in oil futures markets.
+Added: The oil demand shock was caused by the COVID-19 pandemic and the oil supply shock was caused by a Saudi-Russia price war.
+Added: These twin shocks, which had never occurred at the same time before, caused several unprecedented effects.
+Added: First, the front month WTI Oil Futures Contract traded at negative prices for the first and only time in history.
+Added: Crude oil hit an all-time closing low of $(37.63) on April 20, 2020.
+Added: Second, annualized volatility of front month WTI crude oil futures prices reached 984% in May 2020 after averaging 25% in the first two months of 2020 and 35% in 2019.
+Added: The volatility includes several record-breaking returns that occurred between March and May of 2020.
+Added: Third, WTI Oil Futures Contracts, which typically move together (i.e., increase or decrease) about 99% of the time, often moved in opposite directions, with daily correlation dropping to (24%).
+Added: Fourth, futures curves, which can exhibit conditions known as “contango” and “backwardation” (as discussed above), moved into an extreme formation that some market experts referred to as “super contango.” This was a result of extreme bearishness in spot prices, which saw the front month WTI Oil Futures Contract detach from the rest of the futures curve and fall to an extreme position relative to later dated futures contracts.
+Added: USO, among other market participants, diversified its portfolio away from the front of the futures curve in favor of deferred contract months.
+Added: As economies reopened and OPEC+ supply cuts were absorbed by the market, WTI crude oil prices rose from all-time lows and conditions for a new bull market emerged.
+Added: Bullish fundamentals for crude oil prices were already in place when Russia invaded Ukraine in February of 2022.
+Added: The war led to another round of heightened volatility and higher prices.
+Added: Crude oil peaked in May 2022, then declined for the remainder of the year.
+Added: Since early 2023, crude oil prices have traded mostly between approximately $65 to $80, with several prominent price reversals.
+Added: In the fourth quarter of 2024, U.S.
+Added: crude oil production averaged 13.5 mbd.
+Added: production has risen since the height of the COVID-19 pandemic in 2020.
+Added: OPEC crude production has mostly declined since late 2022 as the cartel has supported prices with voluntary output cuts.
+Added: Globally, the U.S.
+Added: Energy Information Administration estimates that crude oil supply will slightly exceed demand in 2025 by 0.3 mbd, while the International Energy Agency expects a 0.7 mbd supply surplus.
+Added: Russia and OPEC have still not returned to pre-pandemic production levels, while the U.S.
+Added: has become the world’s largest crude oil producing nation and other oil producing nations
+Added: have also increased their output.
+Added: OPEC has fiercely supported prices with voluntary cuts and production quotas over the last several years.
+Added: The cartel announced plans to begin unwinding voluntary cuts and increasing quotas in 2024, but delayed and made adjustments to these plans several times.
+Added: OPEC may continue to restrict production if conditions warrant.
+Added: However, pressure from the Trump administration may tip the scales in favor of those in the cartel who wish to increase production sooner than later.
+Added: If OPEC’s strategic focus shifts from price support to market share defense, prices could come under pressure.
+Added: Even if OPEC continues to postpone the unwinding of its cuts and voluntary quotas, any sluggishness in the global economy could weigh on prices.
+Added: In the U.S., the Trump administration has aggressively called for increased domestic production and its actions have and will make more drilling possible.
+Added: However, U.S.
+Added: drillers have shown restraint in recent years, and it is likely that ongoing growth in U.S.
+Added: production will continue along the same trajectory.
+Added: Technology, geology, and economics tend to be larger determinants of U.S.
+Added: production levels than political policy.
+Added: The current geopolitical situation adds complexity to the supply-demand equation.
+Added: While tensions in the Middle East seem to be abating, the region remains a flash point for risk to crude oil supply.
+Added: Likewise, the Russia-Ukraine war has the potential to create further supply disruptions and price volatility due to sanctions and disruptions.
+Added: Finally, tariffs and other global trade dynamics could curtail the free flow of supply, potentially increasing prices.
Crude Oil Price Movements in Comparison to Other Energy Commodities and Investment Categories.
63 unchanged sentences
During the year ended December 31, 2024, USO did not use other assets to pay expenses.
−Removed: To the extent expenses exceed income, USO’s NAV will be negatively impacted.
+Added: To the extent income exceeded expenses, USO’s NAV will be positively impacted.
Although permitted to do so under its LP Agreement, USO has not leveraged, and does not intend to leverage, its assets through borrowings or otherwise, and makes its investments accordingly.
10 unchanged sentences
however, USO cannot predict whether such an event may occur in the future.
−Removed: Since March 23, 2007, USO has been responsible for expenses relating to:
+Added: Since the March 23, 2007, USO has been responsible for expenses relating to:
(i) management fees, (ii) brokerage fees and commissions, (iii) licensing fees for the use of intellectual property, (iv) ongoing registration expenses in connection with offers and sales of its shares subsequent to the initial offering, (v) other expenses, including tax reporting costs, (vi) fees and expenses of the independent directors of USCF and (vii) other extraordinary expenses not in the ordinary course of business.
55 unchanged sentences
For a list of USO’s current holdings, please see USO’s website at www.uscfinvestments.com.
+Added: The end of day portfolio disclosed on USO’s website would reflect any investments in Futures Contracts beyond the Benchmark Futures Contract, and/or Other Oil-Related Investments, including any made in light of market conditions, regulatory requirements, risk mitigation measures (including those that may be taken by USO, USO’s FCMs, counterparties or other market participants), liquidity requirements, or other factors.
+Added: Independent of the USO website, USO may make available portfolio holdings information to Authorized Participants that reflects USO’s anticipated holdings.
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.