United States Oil Fund Reports Decline in Financial Performance for Fiscal Year 2024

The United States Oil Fund, LP (USO) reported a significant decline in its financial performance for the fiscal year ending December 31, 2024, compared to the previous year. The fund's per share net asset value (NAV) increased to $75.45, up from $66.91 in 2023, reflecting a total return of 12.76%. However, average daily total net assets decreased to approximately $1.32 billion from $1.59 billion in the prior year. The fund's income was bolstered by a realized gain of $121.1 million on closed commodity futures contracts, contrasting with a loss of $63.5 million in 2023. Additionally, dividend and interest income decreased to $62.9 million from $71.7 million, attributed to lower average interest rates on short-term investments.

Operationally, USO's investment strategy underwent a transition beginning in September 2023, shifting back to primarily investing in the Benchmark Oil Futures Contract after a period of diversifying into other oil-related investments due to market volatility and regulatory constraints. As of December 31, 2024, USO held 11,084 NYMEX WTI Crude Oil Futures Contracts, a decrease from 17,200 contracts the previous year. The fund's management indicated that this strategic shift aims to align more closely with its investment objective of tracking the daily changes in the price of light, sweet crude oil.

The filing also highlighted a notable increase in total fees and expenses, which rose to $10.8 million from $11.1 million in 2023, primarily due to higher tax reporting and professional fees. Brokerage commissions also increased significantly, reflecting a higher volume of oil futures contracts traded. The fund's management fees, calculated as a percentage of average daily total net assets, were $5.9 million, down from $7.1 million in the previous year.

Looking ahead, USO's management remains cautious about market conditions, regulatory requirements, and potential volatility in the crude oil markets. The fund's ability to meet its investment objectives may be influenced by external factors such as geopolitical events, changes in supply and demand dynamics, and the ongoing impact of climate change regulations. USO's management has expressed confidence in its strategy to maintain a close correlation with the Benchmark Oil Futures Contract, although it acknowledges the inherent risks associated with commodity trading and market fluctuations.

Overall, while USO's NAV showed improvement, the decrease in average daily total net assets and the challenges faced in the oil markets underscore the complexities of managing a commodity-focused investment fund in a volatile environment.