United States Oil Fund (USO) risk factors, FY2024 10-K

Other

1. 01The following risk factors should be read in connection with the other information included in this annual report on Form 10-K, including Management’s Discussion and Analysis of Financial Condition and Results of Operations and USO’s financial statements and the related notes
2. 02percentage 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
3. 03Other factors impacting the crude oil market. The supply of and demand for crude oil may also be impacted by changes in interest rates, inflation, and other local or regional market conditions, as well as by the development of alternative energy sources
4. 04Natural disasters, public health disruptions (such as the COVID-19 pandemic), and international armed conflicts could impact the price of commodities and/or the value, pricing and liquidity of USO’s investments or assets which, in turn, could cause the loss of your investment in USO
5. 05Historical performance of USO and the Benchmark Oil Futures Contract is not indicative of future performance
6. 06An investment in USO may provide little or no diversification benefits. Thus, in a declining market, USO may have no gains to offset losses from other investments, and an investor may suffer losses on an investment in USO while incurring losses with respect to other asset classes
7. 07The market price at which investors buy or sell shares may be significantly less or more than NAV
8. 08Daily percentage changes in USO’s NAV may not correlate with daily percentage changes in the price of the Benchmark Oil Futures Contract
9. 09Daily percentage changes in the price of the Benchmark Oil Futures Contract may not correlate with daily percentage changes in the spot price of light, sweet crude oil
10. 10An investment in USO is not a proxy for investing in the oil markets, and the daily percentage changes in the price of the Benchmark Oil Futures Contract, or the NAV of USO, may not correlate with daily percentage changes in the spot price of light, sweet crude oil
11. 11Natural forces in the oil futures market known as “backwardation” and “contango” may increase USO’s tracking error and/or negatively impact total return

Tax Risk

1. 12An investor’s tax liability may exceed the amount of distributions, if any, on its shares
2. 13An investor’s allocable share of taxable income or loss may differ from economic income or loss on the shares
3. 14USO could be treated as a corporation for U.S. federal income tax purposes, which may substantially reduce the value of the shares
4. 15USO is organized and operated as a limited partnership in accordance with the provisions of the LP Agreement and applicable state law, and therefore, USO has a more complex tax treatment than traditional mutual funds
5. 16If USO is required to withhold tax with respect to any non-U.S. shareholders, the cost of such withholding may be borne by all shareholders
6. 17The impact of changes in U.S. federal income tax laws on USO is uncertain
7. 18USO will be subject to credit risk with respect to counterparties to OTC contracts entered into by USO
8. 19Valuing OTC derivatives may be less certain than valuing exchange-traded and/or cleared financial instruments
9. 20USO’s rights under an OTC contract may be restricted by regulations
10. 21The use of swap agreements may expose USO to early termination risk, which could result in significant losses to USO

Other Risks

1. 22USO is not leveraged, but it could become leveraged if it had insufficient assets to completely meet its margin or collateral requirements relating to its investments
2. 23reasonably possible, USO becoming leveraged. If market conditions require it, USO may implement risk reduction procedures, which may include changes to USO’s investments, and such changes may occur on short notice
3. 24USO may temporarily limit the offering of Creation Baskets
4. 25Certain of USO’s investments could be illiquid, which could cause large losses to investors at any time or from time to time
5. 26Arca, which could adversely impact an investor’s ability to sell shares
6. 27The NYSE Arca may halt trading in USO’s shares, which would adversely impact an investor’s ability to sell shares
7. 28Shareholders that are not Authorized Participants may only purchase or sell their shares in secondary trading markets, and the conditions associated with trading in secondary markets may adversely affect investors’ investment in the shares
8. 29The lack of an active trading market for USO’s shares may result in losses on an investor’s investment in USO at the time the investor sells the shares
9. 30Limited partners and shareholders do not participate in the management of USO and do not control USCF, so they do not have any influence over basic matters that affect USO
10. 31Under Delaware law, a limited partner might be held liable for USO’s obligations as if it were a general partner if the limited partner participates in the control of the partnership’s business and the persons who transact business with the partnership think the limited partner is the general partner
11. 32There is a risk that USO will not earn trading gains sufficient to compensate for the fees and expenses that it must pay and as such USO may not earn any profit
12. 33USO is subject to extensive regulatory reporting and compliance
13. 34Regulatory changes or actions, including the implementation of new legislation is impossible to predict but may significantly and adversely affect USO
14. 35USO is not a registered investment company so shareholders do not have the protections of the 1940 Act
15. 36Trading in international markets could expose USO to credit and regulatory risk
16. 37USO and USCF may have conflicts of interest, which may permit them to favor their own interests to the detriment of shareholders
17. 38USO could terminate at any time and cause the liquidation and potential loss of an investor’s investment and could upset the overall maturity and timing of an investor’s investment portfolio
18. 39USO does not expect to make cash distributions
19. 40An unanticipated number of Redemption Basket requests during a short period of time could have an adverse effect on USO’s NAV
20. 41The suspension in the ability of Authorized Participants to purchase Creation Baskets could cause USO’s NAV to differ materially from its trading price
21. 42USO may determine that, to allow it to reinvest the proceeds from sales of its Creation Baskets in currently permitted assets in a manner that meets its investment objective, it may limit its offers of Creation Baskets
22. 43USO may be subject to interest rate risk, which may prevent USO from investing fully at prevailing rates until any current investments in Treasury Bills mature in order to avoid selling those investments at a loss
23. 44USO may potentially lose money by investing in government money market funds
24. 45The failure or bankruptcy of a clearing broker could result in a substantial loss of USO’s assets and could impair USO in its ability to execute trades
25. 46houses to segregate all funds received from customers from proprietary assets. There can be no assurance that the requirements imposed by the CEA and CFTC regulations will prevent losses to, or not materially adversely affect, USO or its investors
26. 47The failure or bankruptcy of USO’s Custodian could result in a substantial loss of USO’s assets
27. 48Due to the increased use of technologies, intentional and unintentional cyber-attacks pose operational and information security risks
28. 49USO’s investment returns could be negatively affected by climate change and greenhouse gas restrictions
29. 50USO and USCF are subjects of class action, derivative and other litigation. In light of the inherent uncertainties involved in litigation matters, an adverse outcome in this litigation could materially adversely affect USO’s and USCF’s financial condition