UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
DC 20549
FORM
8-K
CURRENT
REPORT
PURSUANT
TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of
Report (Date of earliest event reported): January 28,
2010
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UNITED
STATES OIL FUND, LP
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(Exact
name of registrant as specified in its
charter)
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Delaware
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20-2830691
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(State
or other jurisdiction
of
incorporation)
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(Commission
File Number)
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(I.R.S.
Employer
Identification
No.)
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1320
Harbor Bay Parkway, Suite 145
Alameda,
California 94502
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(Address of principal executive
offices) (Zip
Code)
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Registrant's
telephone number, including area code: (510)
522-9600
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Not
Applicable
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(Former
name or former address, if changed since last
report)
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Check the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions (see General Instruction
A.2. below):
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o
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Written
communication pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
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o
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
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o
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17
CFR 240.14d-2(b))
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17
CFR 240.13e-4c))
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Item
8.01. Other Events
During
2009, a number of published reports alleged that the trading by large, commodity
exchange traded vehicles, including the United States Oil Fund, LP (“USO”), had
a predictable impact on crude oil futures prices as a result of their large size
and the fact that such funds normally publish the dates upon which they will
“roll” their portfolios’ holdings. The roll is the process in which a fund like
USO sells its current futures contract holdings, typically the nearest contract
month to expiration, and replaces them with another futures contract, typically
the next nearest month contract to expiration.
These
reports alleged that the actions of funds such as USO cause the price of the
nearest month contract to decline relative to the price of the next nearest
month contract as a result of such funds’ large scale selling of the first
contract and simultaneous purchasing of the second contract. As a result, the
price difference between the two contracts (the price “spread”), would increase
and, if at the time the nearest month contract to expiration was trading at a
lower price than the next nearest month contract, a condition referred to in the
futures market as “contango” would occur, or if already present would be
exacerbated. (Note: the crude oil futures market was in a contango
state during all of 2009). USO’s management notes that these allegations have
been made a number of times in reports in the media, but management has not seen
any detailed analysis or data that supports consistent increases in the price
spread at the time of USO’s roll period as measured over multiple monthly
rolls.
USO’s
management believes these reports significantly mischaracterize USO’s impact on
the market price of crude oil and is providing factual information to rebut
these reports. USO in no way intends that the information included in this Form
8-K be considered an “offer” of its units.
USO
typically owns the nearest month to expiration light, sweet crude oil futures
contracts. When those contracts are two weeks from expiration, USO’s portfolio
is rolled by simultaneously selling the nearest month to expiration contract and
purchasing the next nearest month to expiration contract. For example, if the
August 2009 light, sweet crude oil contracts would expire on July 21st, USO
would typically began selling those August contracts on July 7th and
would in turn purchase the September 2009 light, sweet crude oil contracts.
Currently, USO’s holdings are typically rolled over a four day period. Prior to
March of 2009, including January and February 2009, its positions were rolled
during one day. USO’s roll dates are published on its website. USO’s current
holdings are also published on its website.
Since the
end-of-day settlement prices of the futures contracts for light, sweet crude oil
as well as USO’s daily holdings and roll schedule are all publicly available,
management was able to determine what the price spreads were immediately prior
to USO’s roll, what they were during the roll and what they were immediately
after the roll was concluded. Since the crude oil futures market was in contango
throughout 2009, if USO’s rolls were affecting the prices of crude oil futures
contracts, one would expect that the price spreads would have widened as a
result of each monthly roll. However, as shown below, this was not the case.
Instead, the price spreads actually narrowed half the time.
The table
below measures the changes in the spread over the past year in two fashions. The
first compares the price spread between the nearest month to expiration contract
and the next nearest month to expiration contract on the last day before USO’s
roll began and compares it to the average price spread during USO’s roll. The
second measurement compares the average price spread between the nearest month
to expiration contract and the next nearest month to expiration contract on the
four days before USO’s roll began and compares it to the average price spread
during USO’s roll.
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Number
of Months:
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Prior
Day versus
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Average
of Prior Four Days
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Average
of USO’s Roll
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versus
Average of USO’s Roll
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Price
Spread Widened
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6
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7
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Price
Spread Narrowed
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6
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5
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In
addition, on five of the six occasions where the price spread widened between
the last day prior to the roll and the roll itself, the price spread was still
wider even after USO’s roll was over. On five of the seven occasions where the
price spread widened between the average of the four prior days and the roll
itself, the price spread was also still wider after USO’s roll was complete.
Management believes that this suggests that other factors, such as inventory
storage buildups, were at play in determining the price spread both before,
during, and after USO’s roll period.
In sum,
management strongly believes that the activities of USO have not systematically
and predicatively caused changes in the spread between the price of nearest
month to expiration and the next nearest month to expiration crude oil futures
contracts as alleged in some published articles. However, due to the nature of
these claims about USO and its investing practices, USO’s management believes it
has a legitimate concern that the activities of USO could be negatively impacted
to the detriment of its thousands of unitholders, unless such claims are
publicly refuted.
USO’s
management is of the view that the best source of information regarding its
investment objective and the risks associated with an investment in USO is USO’s
most current prospectus and the periodic reports it files with its regulators,
including the Securities and Exchange Commission (“SEC”). Copies of the most
current version of the foregoing can be found at USO’s website, www.unitedstatesoilfund.com, or
through the SEC on its website, www.sec.gov. Copies
are also available on request from USO’s general partner, United States
Commodity Funds LLC. In addition, on a daily basis, USO publishes on
its website its holdings and net asset value.
Certain
matters discussed in this current report on Form 8-K, including any
statements that are predictive in nature or concern future market and economic
conditions, our future performance, or our future actions and their expected
results are “forward-looking statements” within the meaning of the Private
Securities Litigation Reform Act of 1995. Forward-looking statements are based
on current expectations and projections about future events and are not
guarantees of future performance. We do not have a specific policy or intent of
updating or revising forward-looking statements. Actual events and results may
differ materially from those expressed or forecasted in forward-looking
statements due to a number of factors. Please see our periodic reports and other
filings with the SEC for a further discussion of these and other risks and
uncertainties applicable to our business. The forward-looking statements
and projections contained in this current report on Form 8-K are excluded from
the safe harbor protection provided by Section 21E of the Securities
Exchange Act of 1934.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
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UNITED
STATES OIL FUND, LP
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By:
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United
States Commodity Funds LLC, its general partner
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By:
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/s/ Howard
Mah |
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Name:
Howard
Mah |
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Title: Chief
Financial Officer |
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