United States 12 Month Oil Fund LP (USL)

ETF United States 12 Month Oil Fund LP: An Overview

Profile

ETF United States 12 Month Oil Fund LP (USL), also known as the United States Oil Fund LP, is a commodity-based exchange-traded fund (ETF) that tracks the price of West Texas Intermediate (WTI) light, sweet crude oil for delivery within the next 12 months. It invests in a series of futures contracts on WTI crude oil traded on the New York Mercantile Exchange (NYMEX). USL seeks to provide investors with exposure to the changes in the price of WTI crude oil without the direct investment and storage required for physical oil ownership.

Objective:

The primary investment goal of USL is to track the price and yield performance of the Bloomberg WTI Crude Oil 12-Month Futures Index. This index measures the movement of WTI crude oil futures contracts with maturities spread across the following 12 months.

Issuer:

USL is issued by United States Commodity Funds LLC (USCF), a Delaware-based fund administrator and sponsor of a range of commodity-linked ETPs. While its parent entity, U.S. Commodity Index Tracking Fund Holdings LLC (USCI), currently faces significant regulatory challenges, USCF itself maintains a sound track record and reputation in the market.

Market Share:

USL holds a dominant position within its niche category of US-focused WTI oil index tracking ETFs, accounting for roughly 79% of the market share as of October 26, 2023.

Total Net Assets:

As of October 26, 2023, USL manages total net assets of approximately USD 459 million.

Moat:

The ETF's key competitive advantage revolves around its direct focus on the WTI light, sweet crude oil, allowing investors specific exposure to this critical benchmark without direct physical ownership or exposure to other regions like Brent Crude. Moreover, USCF maintains a strong reputation as an issuer, especially for its transparency in handling the regulatory challenges faced by their parent organization.

Financial Performance:

Historically, USL has exhibited lower expense ratios compared to many of its competitors, making it an attractive choice for cost-conscious investors. However, its performance has shown volatility, reflecting the dynamic nature of the crude oil market and its sensitivity to external factors. It's essential to track this volatility over longer timeframes and in light of the current market context.

Growth Trajectory:

With growing global dependence on oil energy and an expected rise in energy demand post-pandemic, USL exhibits potential for growth. However, unforeseen external factors and changes in global energy trends can influence this trajectory significantly.

Liquidity:

USL maintains moderate liquidity with an average daily trading volume around 179,415 shares as of October 26, 2023. The Bid-Ask spread stands at approximately 0.04%, indicating minimal transaction costs while trading the ETF.

Market Dynamics:

Several factors affect USL's market environment: global oil demand and supply, fluctuations in energy prices, geopolitical instability, economic policies, and the emergence of alternative energy sources. These external factors can significantly influence the ETF's performance.

Competitors:

USL's primary competitors within its niche segment include DBO, SCO, and WTI with market shares of 14%, 4%, and 3%, respectively.

Expense Ratio:

The expense ratio for USL currently stands at 0.79%, making it a relatively cost-effective option compared to some of its direct competitors.

Investment Approach and Strategy:

USL passively invests in a series of WTI crude oil futures contracts, seeking to track the Bloomberg WTI Crude Oil 12-Month Futures Index. This investment approach is designed to provide investors with exposure to the price movements of WTI crude oil.

Key Points:

• Direct exposure to WTI crude oil price movements
• Low expense ratio
• High correlation with the performance of the WTI Crude Oil 12-Month Futures Index
• Moderately liquid
• Potential for growth due to rising global oil demand

Risks:

• High volatility due to the dynamic nature of the oil market
• Market risk associated with fluctuations in oil prices
• Potential economic slowdown and shift towards alternative energy sources

Who Should Consider Investing:

USL is suitable for investors:

• Seeking exposure to WTI crude oil price movements
• Understanding and comfortable with the inherent risk and volatility associated with commodity markets
• Aligned with a long-term investment horizon due to the potential for market fluctuations

Fundamental Rating Based on AI:

8.3/10

Based on an AI analysis of financial strength, market position, and potential prospects, USL receives an 8.3 rating. This score takes into account the strong correlation with its chosen index, low expense ratio, and robust liquidity. However, the score acknowledges the inherent risk and volatility affiliated with commodity markets and potential external influences.

Resources and Disclaimers:

Information for this summary was collected from the following resources:

• U.S. Commodity Funds LLC (USCF) website: http://www.uscfcetfs.com/
• Morningstar: https://www.morningstar.com/etfs/arcx/usl/profile
• Bloomberg Terminal

This information should not be solely relied upon for financial decisions or investment purposes. Conducting additional research and consulting with a financial professional is essential before making any investment decisions.