10-Q: US Gasoline Fund Reports H1 2025 Net Loss

United States Gasoline Fund, LP reported a net loss of $3.64 million for the first half of 2025, a significant decline from a $12.16 million net income in the prior year period, primarily due to unrealized losses on commodity futures contracts.

Summary

• United States Gasoline Fund, LP (UGA) reported a net loss of $3,640,293 for the six months ended June 30, 2025, a substantial decrease from a net income of $12,157,902 for the same period in 2024.
• Total assets decreased to $72,482,633 as of June 30, 2025, from $100,979,895 at December 31, 2024.
• Partners Capital declined to $72,334,047 at June 30, 2025, from $100,710,891 at December 31, 2024.
• The net asset value (NAV) per share decreased to $60.28 at June 30, 2025, from $62.94 at December 31, 2024.
• The fund experienced a change from an unrealized gain of $2,757,430 on open commodity futures contracts at December 31, 2024, to an unrealized loss of $4,684,739 at June 30, 2025.
• Total return for the six months ended June 30, 2025, was (4.23)%, compared to 11.30% for the same period in 2024.
• The fund's actual total return of (4.23)% for the six months ended June 30, 2025, outperformed its Benchmark Futures Contract's expected total return of (5.70)% by 1.48%.
• Average daily change in UGA's per share NAV for the 30-valuation days ended June 30, 2025, was 0.016%, tracking within the +/10% range of the Benchmark Futures Contract's 0.004% average daily change.
• 200,000 partnership shares were redeemed during the second quarter of 2025 at an average price of $59.74 per share.
• Cash and cash equivalents decreased to $58,794,599 at June 30, 2025, from $75,857,796 at December 31, 2024.

Sentiment

Score: 3

Explanation: The sentiment is negative due to a significant net loss, substantial decline in total assets and partners' capital, and a shift from unrealized gains to losses on futures contracts. While the fund met its tracking objective and some legal issues were resolved, the overall financial performance for the period is poor, indicating a challenging operating environment and asset depreciation.

Positives

• The fund's actual total return of (4.23)% for the six months ended June 30, 2025, outperformed its Benchmark Futures Contract's expected total return of (5.70)% by 1.48%.
• The average daily change in the fund's per share NAV for the 30-valuation days ended June 30, 2025, was 0.016%, which is within the target range of 90% to 110% of the Benchmark Futures Contract's average daily change of 0.004%.
• Total expenses for the six months ended June 30, 2025, decreased slightly to $414,441 from $448,167 in the prior year period.
• The Optimum Strategies Action, a legal proceeding against USO and USCF, was dismissed with prejudice on March 15, 2023.

Negatives

• The fund reported a net loss of $3,640,293 for the six months ended June 30, 2025, a significant decline from a net income of $12,157,902 in the comparable prior year period.
• Total assets decreased by approximately 28.3% from $100,979,895 at December 31, 2024, to $72,482,633 at June 30, 2025.
• Partners Capital decreased by approximately 28.2% from $100,710,891 at December 31, 2024, to $72,334,047 at June 30, 2025.
• The net asset value per share declined to $60.28 at June 30, 2025, from $62.94 at December 31, 2024.
• The fund experienced a significant swing from an unrealized gain of $2,757,430 on open commodity futures contracts at December 31, 2024, to an unrealized loss of $4,684,739 at June 30, 2025.
• Dividend and interest income earned on investments decreased to $1,705,549 for the six months ended June 30, 2025, from $2,545,143 in the prior year period.
• Net cash used in financing activities was $24,736,551 for the six months ended June 30, 2025, a significant change from $7,553,534 provided in the prior year period, primarily due to fewer additions of partnership shares.
• The number of limited partner shares outstanding decreased to 1,200,000 at June 30, 2025, from 1,600,000 at December 31, 2024.

Risks

• Commodity price risk: Fluctuations in the value of futures contracts directly affect the value of shares.
• Credit risk: Exposure to counterparty failure (clearinghouse, FCMs, OTC swap counterparties) to meet obligations, potentially leading to loss of deposited assets.
• Market volatility: Events like the COVID-19 pandemic, Russia-Ukraine war, Middle East conflicts, tariffs, and trade barriers can negatively impact commodity prices and investment liquidity.
• Interest rate risk: Changes in interest rates can cause fixed income securities and other investments to fluctuate in value, potentially leading to losses if investments are sold prematurely.
• Inflation risk: As inflation increases, the present value of the fund's cash and Treasury investments may decline.
• Money market fund risk: Investments in government money market funds are not guaranteed and may fall below $1.00 per share.
• Contango and backwardation: Natural market forces that can impact the total return on an investment in the fund's shares relative to a hypothetical direct investment in gasoline.
• Regulatory changes: Evolving regulations in commodity interest trading, including accountability levels, position limits, and margin rules for swaps, could inhibit the fund's ability to meet its investment objective.
• Illiquidity: Market conditions or regulatory considerations may prevent the fund from promptly liquidating its positions in Futures Contracts.
• OTC contract risk: OTC swaps involve counterparty credit risk and may be less certain to value than exchange-traded instruments, potentially increasing liquidity risk and transaction expenses.
• Uncertain impact of changes in U.S. federal income tax laws: Legislative or other actions relating to U.S. federal income taxes could have a negative effect on the fund or its investors.

Future Outlook

Management anticipates that interest rates may continue to stagnate in the near future. If interest earned by the fund remains greater than its fees and expenses, the fund could potentially outperform its benchmark. Geopolitical conflicts and their resolution could either raise or lower crude oil and gasoline prices.

Management Comments

• USCF believes that over both the medium-term and the long-term, changes in the price of crude oil will exert the greatest influence on the price of refined petroleum products such as gasoline.
• USCF anticipates that interest rates may continue to stagnate over the near future. It is anticipated that fees and expenses paid by UGA may be lower than interest earned by UGA. As such, USCF anticipates that UGA could possibly outperform its benchmark so long as interest earned is greater than the fees and expenses paid by UGA.

Industry Context

The gasoline market experienced price volatility in the first half of 2025, with prices increasing by 3.91% from the end of 2024 to June 30, 2025. Crude oil prices, which significantly influence gasoline, have traded mostly between $65 to $80 since early 2023. Geopolitical events, such as the Russia-Ukraine war, Middle East conflicts (e.g., attack on Iran's nuclear facilities in June 2025), and trade policies (e.g., Trump administration tariffs), continue to introduce significant supply-demand uncertainty and price volatility. OPEC+ production levels and their plans to unwind voluntary cuts also play a crucial role in market dynamics.

Comparison to Industry Standards

• The fund's average daily change in NAV for the 30-valuation days ended June 30, 2025, was 0.016%, which is within the target range of 90% to 110% of the Benchmark Futures Contract's average daily change of 0.004%.
• Since its inception on February 26, 2008, to June 30, 2025, the fund's average daily change in NAV was 0.033%, closely tracking the Benchmark Futures Contract's average daily change of 0.032%, with an average daily difference of 0.001%.
• For the six months ended June 30, 2025, the fund's actual total return of (4.23)% outperformed the Benchmark Futures Contract's expected total return of (5.70)% by 1.48%.
• The fund's performance is subject to contango and backwardation, natural market forces that impact total returns relative to a hypothetical direct investment in gasoline, which is a common characteristic of commodity futures-based funds.
• The correlation matrix provided shows unleaded gasoline's monthly price movements against other energy commodities (crude oil, heating oil, natural gas) and major non-commodity asset classes (large cap US equities, US government bonds, global equities) over 1-year and 10-year periods, indicating varying degrees of correlation, with stronger correlation to other petroleum products.

Legal Proceedings

• Optimum Strategies Action: A lawsuit filed on April 6, 2022, against USO and USCF, alleging violations of the Securities Exchange Act of 1934 and the Connecticut Uniform Securities Act. The court granted the defendants' motion to dismiss the complaint with prejudice on March 15, 2023.
• Settlement of SEC and CFTC Investigations: On November 8, 2021, USCF and USO resolved investigations with the SEC and CFTC, resulting in cease-and-desist orders and civil monetary penalties totaling $2,500,000 paid by USCF.
• In re: United States Oil Fund, LP Securities Litigation: A consolidated putative class action filed against USCF, USO, and other defendants, alleging violations of the 1933 Act and the Exchange Act related to disclosures during extraordinary market conditions in 2020. Defendants intend to vigorously contest these claims.
• Mehan Action: A derivative action filed on August 10, 2020, against USCF, USO, and individual defendants, alleging breaches of fiduciary duties. All proceedings are stayed pending disposition of motions to dismiss in the In re: United States Oil Fund, LP Securities Litigation.
• In re United States Oil Fund, LP Derivative Litigation: Consolidated derivative actions filed on August 27, 2020, against USCF, USO, and individual defendants, alleging violations of the Exchange Act and common law claims. All proceedings are stayed pending disposition of motions to dismiss in the In re: United States Oil Fund, LP Securities Litigation.

Related Party Transactions

• USCF Management Fee: UGA pays USCF a monthly fee equal to 0.60% per annum of average daily total net assets for investment management and administrative services.
• Marketing Agent Agreement: USCF pays ALPS Distributors, Inc. a fee equal to 0.025% of UGA's total net assets for marketing services.
• Custody, Transfer Agency, and Fund Administration and Accounting Services: USCF pays BNY Mellon for these services.
• NYMEX Licensing Agreement: UGA pays NYMEX an asset-based licensing fee equal to 0.015% on all net assets for the use of settlement prices and service marks.
• Investor Tax Reporting Cost: UGA pays fees and expenses associated with its audit and tax accounting/reporting requirements, estimated at $250,000 for the year ending December 31, 2025.

Stakeholder Impact

• Shareholders: Experienced a decline in net asset value per share and a negative total return, indicating a decrease in investment value.
• General Partner (USCF): Management fees are tied to the fund's average daily total net assets, so the decrease in assets will result in lower management fees.
• Service Providers (FCMs, BNY Mellon, Marketing Agent): Continue to receive fees for their services, though some fees are tied to asset levels or trading volume, which may be impacted by the fund's size and activity.

Next Steps

• The fund will continue to publish monthly account statements for shareholders, furnished to the SEC on Form 8-K and posted on its website.

Key Dates

Recommendation

The fund reported a significant net loss for the first half of 2025, a sharp reversal from prior year's income, driven by substantial unrealized losses on commodity futures contracts. Total assets and partners' capital have declined significantly, and the net asset value per share has decreased. While the fund has met its tracking objective and some past legal issues have been resolved, the overall financial deterioration, coupled with ongoing market volatility and the inherent risks of commodity futures investing (including contango/backwardation and geopolitical impacts), suggests a negative outlook. A seasoned investor would likely recommend selling to mitigate further potential losses given the current performance trends and market conditions.

Keywords

Gasoline, RBOB, Commodity Pool, Futures Contracts, Energy, Investment Fund, SEC Filing, 10-Q, UGA, USCF, NYSE Arca, ETP