UNITED
      STATES


SECURITIES
      AND EXCHANGE COMMISSION


Washington,
      D.C. 20549




FORM
      10-K




x
            Annual
                report pursuant to
                Section 13 or 15(d) of the Securities Exchange Act of 1934 for the
                fiscal year ended December 31, 2007.




 ̈
            Transition
                report pursuant to
                Section 13 or 15(d) of the Securities Exchange Act of 1934 for the
                transition period fromto.




Commission
      file number: 001-32834




United
      States Oil Fund,
      LP


(Exact
      name of registrant as
      specified in its charter)




Delaware
            
            20-2830691(State
                or other jurisdiction ofincorporation
                or
                organization)
            
            (I.R.S.
                EmployerIdentification
                No.)




1320
      Harbor Bay Parkway, Suite
      145


Alameda,
      California
      94502


(Address
      of principal executive
      offices) (Zip Code)




(510)
      522-3336


(Registrant’s
      telephone number,
      including area code)




Securities
      registered pursuant to
      Section 12(b) of the Act:






Units American
      Stock
      Exchange




(Title
        of class)     (Name of exchange on which
        registered)


Securities
      registered pursuant to
      Section 12(g) of the Act: None




Indicate
      by check mark if the registrant is a well-known seasoned issuer, as defined
      in
      Rule 405 of the Securities Act.


 ̈ Yes x No





Indicate
      by check mark if the registrant is not required to file reports pursuant to
      Section 13 or Section 15(d) of the Act.


 ̈ Yes x No





Indicate
      by check mark whether the registrant (1) has filed all reports required to
      be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
      during the preceding 12 months (or for such shorter period that the registrant
      was required to file such reports), and (2) has been subject to such filing
      requirements for the past 90 days.


x Yes  ̈ No





Indicate
      by check mark if disclosure of delinquent filers pursuant to Item 405 of
      Regulation S-K (§229.405) is not contained herein, and will not be contained, to
      the best of registrant’s knowledge, in definitive proxy or information
      statements incorporated by reference in Part III of this Form 10-K or any
      amendment to this Form 10-K. x




Indicate
      by check mark whether the registrant is a large accelerated filer, an
      accelerated filer, a non-accelerated filer or a smaller reporting company.
      See definitions of “large accelerated filer," "accelerated filer” and
      "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one.)


Large
      accelerated filer  ̈ Accelerated
      filer  x Non-accelerated
      filer  ̈Smaller reporting company   ̈


(Do
      not check if a smaller reporting company)




Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12b-2 of the Act.).


 ̈ Yes x No


The
        aggregate market value of the registrant’s units held by non-affiliates of the
        registrant as of June
        30,
        2007 was: $673,000,000.
  The
        registrant had 4,100,000 outstanding units as of March
        12, 2008.


DOCUMENTS
      INCORPORATED BY
      REFERENCE:


None.








UNITED
                  STATES OIL FUND,
                  LPTable
                  of
                  ContentsPart
                  I.
              
              PageItem
                  1. Business
              
              1Item
                  1A. Risk Factors
              
              33Item
                  1B. Unresolved Staff Comments
              
              48Item
                  2. Properties
              
              48Item
                  3. Legal Proceedings
              
              48Item
                  4. Submission of Matters to a Vote of Security
                  Holders
              
              49Part
                  II.Item
                  5. Market for Registrant's Common Equity, Related
                  StockholderMatters
                  and Issuer Purchases of Equity
                  Securities
              
              49Item
                  6. Selected Financial Data
              
              50Item
                  7. Management's Discussion and Analysis of Financial
                  Conditionand
                  Results of Operations
              
              51Item
                  7A. Quantitative and Qualitative Disclosures About
                  Market Risk
              
              59Item
                  8. Financial Statements and Supplementary
                  Data
              
              60Item
                  9. Changes in and Disagreements with Accountants onAccounting
                  and Financial Disclosure
              
              72Item
                  9A. Controls and Procedures
              
              72Item
                  9B. Other Information
              
              73Part
                  III.Item
                  10. Directors, Executive Officers and
                  Corporate Governance
              
              73Item
                  11. Executive Compensation
              
              76Item
                  12. Security Ownership of Certain Beneficial Owners
                  andManagement
                  and Related Stockholder
                  Matters
              
              77Item
                  13. Certain Relationships and Related
                  Transactions, and Director Independence
              
              77Item
                  14. Principal Accountant Fees and
                  Services
              
              77Part
                  IV.Item
                  15. Exhibits and Financial Statement
                  Schedules
              
              78Exhibit
                  Index
              
              78Signatures
              
              79


Part
        I





Item 1.
            Business.




What
        is USOF?
  United
        States Oil Fund, LP ("USOF") is a Delaware limited partnership
        organized on May 12, 2005. USOF maintains its main business office at 1320
        Harbor Bay Parkway, Suite 145, Alameda, California 94502. USOF is a commodity
        pool that issues limited partnership interests ("units") traded on the American
        Stock Exchange (the "AMEX"). It operates pursuant to the terms of the Fourth
        Amended and Restated Agreement of Limited Partnership dated as of November
        13, 2007 (the "LP Agreement"), which grants full management control to the
        General Partner.
  Who
        is the General
        Partner?
  USOF's
        sole general partner is Victoria Bay Asset Management, LLC (the "General
        Partner"), a single member limited liability company that was formed in the
        state of Delaware on May 10, 2005. It maintains its main business office
        at 1320
        Harbor Bay Parkway, Suite 145, Alameda, California 94502. The General Partner
        is
        a wholly-owned subsidiary of Wainwright Holdings, Inc., a Delaware corporation
        (“Wainwright”). Mr. Nicholas Gerber (discussed below) controls Wainwright
        by virtue of his ownership of Wainwright’s shares. Wainwright is a holding
        company that also owns an insurance company organized under Bermuda law and
        a
        registered investment adviser firm named Ameristock Corporation. The General
        Partner is a member of the National Futures Association (the "NFA") and was
        registered with the Commodity Futures Trading Commission (the "CFTC") as
        of
        December 1, 2005. The General Partner’s registration as a Commodity Pool
        Operator ("CPO") was approved on December 1, 2005.
  On
        September 8, 2006, the General Partner formed the United States Natural Gas
        Fund, LP ("USNG"), another limited partnership that is a commodity pool
        and issues units traded on the AMEX. The investment objective of
        USNG is for the changes in percentage terms of the units' net asset value
        ("NAV") to reflect the changes in percentage terms of the price of natural
        gas
        delivered at the Henry Hub, Louisiana, as measured by the changes in the
        price
        of the futures contract on natural gas traded on the New York Mercantile
        Exchange (the "NYMEX"), less USNG’s expenses. USNG began trading on April 18,
        2007. The General Partner is the general partner of USNG and is responsible
        for
        the management of USNG. Wainwright was the initial limited partner of USNG.
        Investors in USOF who wish to receive additional information concerning the
        United States Natural Gas Fund, LP, may do so by calling 1-800-920-0259,
        or
        going on-line to www.unitedstatesnaturalgasfund.com.
  On
          June
          27, 2007, the General Partner formed the United States 12 Month Oil Fund,
          LP
          (“US12OF”), also a limited partnership that is a commodity pool and issues units
          traded on the AMEX.  The investment objective of US12OF is for changes
          in percentage terms of its units’ NAV to reflect the changes in percentage terms
          of the price of light, sweet crude oil delivered to Cushing, Oklahoma,
          as
          measured by the changes in the average of the prices of 12 futures contracts
          on
          crude oil traded on the NYMEX, less US12OF's expenses.  US12OF
          began trading on December 6, 2007. The General Partner is the general partner
          of
          US12OF and is responsible for the management
          of US12OF.  Wainwright was the initial limited partner of US12OF.
          Investors in USOF who wish to receive additional information concerning
          the
          United States 12 Month Oil Fund, LP, may do so by calling 1-800-920-0259,
          or
          going on-line to www.unitedstates12monthoilfund.com.
  On
            April
            12, 2007, the General Partner formed the United States Gasoline Fund,
            LP
            (“USG”), also a limited partnership that is a commodity pool and issues units
            traded on the AMEX.  The investment  objective of USG is for
            the changes in percentage terms of its units’ NAV to reflect the changes in
            percentage terms of the price of unleaded gasoline delivered to the New
            York
            harbor, as measured by the changes in the price of the futures contract
            on
            gasoline traded on the NYMEX, less USG's expenses.  USG began trading
            on February 26, 2008.  The General Partner is the general partner of
            USG and is responsible for the management of USG.  Wainwright was the
            initial limited partner of USG.  Investors in USOF who wish to receive
            additional information concerning the United States Gasoline Fund, LP,
            may do so
            by calling 1-800-920-0259, or going on-line to
            www.unitedstatesgasolinefund.com.
 The
          General Partner is currently in the process of registering two other exchange
          traded security funds, the United States Heating Oil Fund, LP (“USHO) and the
          United States 12 Month Natural Gas Fund, LP (“US12NG”).  USHO will be
          a publicly traded limited partnership which seeks to have the changes in
          percentage terms of its units’ NAV track the changes in percentage terms of the
          price of heating oil (also known as No. 2 fuel) delivered to the New York
          harbor.  US12NG will be a publicly traded limited partnership which
          will seek to have the changes in percentage terms of its units’ NAV reflect the
          changes in percentage terms of the price of natural gas delivered at the
          Henry
          Hub, Louisiana, as measured by the changes in the average of the prices
          of 12
          futures contracts on natural gas traded on the NYMEX.
 1
 The
              General Partner is required to evaluate the credit risk for USOF to
              the futures
              commission merchant, oversee the purchase and sale of USOF’s units by certain
              authorized purchasers ("Authorized Purchasers"), review daily positions
              and
              margin requirements of USOF and manage USOF’s investments. The General Partner
              also pays the fees of ALPS Distributors, Inc. (the "Marketing Agent")
              and Brown
              Brothers Harriman & Co. ("BBH&Co."), which acts as the administrator
              (the "Administrator") and the custodian (the "Custodian") for
              USOF.
 Limited
              partners have no right to elect the General Partner on an annual or
              any other
              continuing basis. If the General Partner voluntarily withdraws, however,
              the
              holders of a majority of USOF's outstanding units (excluding for purposes
              of
              such determination units owned, if any, by the withdrawing General Partner
              and its affiliates) may elect its successor. The General Partner may
              not be
              removed as general partner except upon approval by the affirmative
              vote of the
              holders of at least 66 and 2/3 percent of USOF's outstanding units
              (excluding
              units owned, if any, by the General Partner and its affiliates), subject to
              the satisfaction of certain conditions set forth in the LP
              Agreement.
  The
              business and affairs of the General Partner are managed by a board
              of directors,
              which is comprised of four management directors, some of whom are also
              its
              executive officers (the “Management Directors”) and three independent directors
              who meet the independent director requirements established by the AMEX
              and the
              Sarbanes-Oxley Act of 2002. Notwithstanding the foregoing, the Management
              Directors have the authority to manage the General Partner pursuant
              to its Third
              Amended and Restated Limited Liability Company Agreement. The board
              of directors
              of the General Partner has an audit committee which is made up of the
              three
              independent directors (Peter M. Robinson, Gordon L. Ellis and Malcolm
              R. Fobes
              III). The audit committee is governed by an audit committee charter
              that is
              posted on USOF’s website, http://www.unitedstatesoilfund.com. Mr. Fobes and
              Mr. Ellis meet the financial sophistication requirements of the AMEX and
              the audit committee charter. Through its Management Directors, the
              General
              Partner manages the day-to-day operations of USOF.
  How
          Does USOF
          Operate?
  The
          net
          assets of USOF consist primarily of investments in futures contracts
          for light, sweet crude oil, but may also consist of other types of crude
          oil, heating oil, gasoline, natural gas and other petroleum-based fuels
          that are
          traded on the NYMEX, ICE Futures or other U.S. and foreign exchanges
          (collectively, “Oil Futures Contracts”). USOF may also invest in other
          oil-related investments such as cash-settled options on Oil Futures Contracts,
          forward contracts for oil, and over-the-counter transactions that are based
          on
          the price of crude oil, other petroleum-based fuels, Oil Futures Contracts
          and
          indices based on the foregoing (collectively, “Other Oil Interests”). For
          convenience and unless otherwise specified, Oil Futures Contracts and Other
          Oil
          Interests collectively are referred to as “oil interests” in this annual report
          on Form 10-K.
  USOF
          invests in oil interests to the fullest extent possible without being leveraged
          or unable to satisfy its current or potential margin or collateral obligations
          with respect to its investments in Oil Futures Contracts and Other Oil
          Interests. In pursuing this objective, the primary focus of the General
          Partner
          is the investment in Oil Futures Contracts and the management of its investments
          in short-term obligations of the United States of two years or less
          (“Treasuries”), cash and/or cash equivalents for margining purposes and as
          collateral.
  The
          investment objective of USOF is to have the changes in percentage terms
          of the
          units’ NAV reflect the changes in percentage terms of the spot price
          of light, sweet crude oil delivered to Cushing, Oklahoma, as measured by
          the changes in the price of the futures contract on light, sweet crude
          oil as
          traded on the NYMEX that is the near month contract to expire, except when
          the
          near month contract is within two weeks of expiration, in which case the
          futures
          contract will be the next month contract to expire, less USOF's expenses.
          It
          is not
          the intent of USOF to be operated in a fashion such that its NAV will equal,
          in
          dollar terms, the spot price of light, sweet crude oil or any particular
          futures
          contract based on light, sweet crude oil.
 2


USOF
        seeks to achieve its investment objective by investing in a mix of Oil Futures
        Contracts and Other Oil Interests such that changes in USOF’s NAV will closely
        track the changes in the price of a specified Oil Futures Contract (the
“Benchmark Oil Futures Contract”). The General Partner believes changes in the
        price of the Benchmark Oil Futures Contract have historically exhibited a
        close
        correlation with the changes in the spot price of light, sweet crude oil.
        On any valuation day (a valuation day is any day as of which USOF calculates
        its
        NAV), the Benchmark Oil Futures Contract is the near month contract
        for light, sweet crude oil traded on the NYMEX unless the near month
        contract will expire within two weeks of the valuation day, in which case
        the
        Benchmark Oil Futures Contract is the next month contract for light, sweet
        crude
        oil traded on the NYMEX.
 As
          a
          specific benchmark, the General Partner endeavors to place USOF’s trades in Oil
          Futures Contracts and Other Oil Interests and otherwise manage USOF’s
          investments so that A will be within plus/minus 10 percent of B,
          where:
 
 ·
                A
                    is the average daily change in USOF’s NAV for any period of 30 successive
                    valuation days; i.e.,
                    any day as of
                    which USOF calculates its NAV, and
 ·
                B
                    is the average daily change in the price of the Benchmark Oil
                    Futures
                    Contract over the same
                    period.
  The
        General Partner believes that market arbitrage opportunities cause daily
        changes
        in USOF’s unit price on the AMEX to closely track daily changes in USOF’s NAV.
        The General Partner further believes that the daily changes in prices of
        the
        Benchmark Oil Futures Contract have historically closely tracked the daily
        changes in the spot price of light, sweet crude oil. The General Partner
        believes that the net effect of these two relationships and the expected
        relationship described above between USOF’s NAV and the Benchmark Oil Futures
        Contract will be that the daily changes in the price of USOF’s units on the AMEX
        will continue to closely track the daily changes in the spot price of a barrel
        of light, sweet crude oil, less USOF’s expenses. The
        following graph demonstrates the correlation between the daily changes in
        the
        NAV of USOF and the daily changes in the Benchmark Oil Futures Contract during
        the last thirty valuation days ended December 31, 2007 .









An
      investment in the units allows both retail and institutional investors to easily
      gain exposure to the crude oil market in a cost-effective manner. In addition,
      the units also provide additional means for diversifying an investor’s
      investments or hedging exposure to changes in oil prices.


3
 The
        Benchmark Oil Futures Contract will be changed or “rolled” from the near month
        contract to expire to the next month to expire during one day.
  These
        relationships are illustrated in the following diagram:


The
        Price of USOF’s Units Is Expected
        to Correlate Closely
 With
        USOF’S NAV
  USOF’s
        units are traded on the AMEX. The price of
 units
        fluctuates in response to USOF’s NAV and the supply and demand
 pressures
        of the AMEX. Because of certain arbitrage opportunities, the
 General
        Partner believes the price of USOF’s units traded on the
 AMEX
        will
        correlate closely with USOF’s NAV.
   Daily
        Changes in USOF’s NAV Are
        Expected to Correlate Closely With
 Daily
        Changes in the Price of the
        Benchmark Oil
 Futures
        Contract
  The
        General Partner endeavors to invest USOF’s assets as fully as
 possible
        in Oil Futures Contracts and Other Oil Interests so that the
 changes
        in the NAV closely correlate with changes in the price of the
 Benchmark
        Oil Futures Contract.
   Daily
        Changes in the Price of the
        Benchmark Oil Futures
 Contract
        Are Expected to Correlate
        Closely With Daily Changes
 in
        the Spot Price of Light,
        Sweet Crude Oil
  The
        General Partner believes that changes in the price of the Benchmark
 Oil
        Futures Contract will closely correlate with changes in the cash or
 spot
        price of light, sweet crude oil
  4
 The
            General Partner employs a “neutral” investment strategy in order to track
            changes in the price of the Benchmark Oil Futures Contract regardless
            of whether
            the price goes up or goes down. USOF’s “neutral” investment strategy is designed
            to permit investors generally to purchase and sell USOF’s units for the purpose
            of investing indirectly in oil in a cost-effective manner, and/or to
            permit
            participants in the oil or other industries to hedge the risk of losses
            in their
            crude oil-related transactions. Accordingly,
            depending on the investment objective of an individual investor, the
            risks
            generally associated with investing in crude oil and/or the risks involved
            in
            hedging may exist. In addition, an investment in USOF involves the risk
            that the
            changes in the price of USOF’s units will not accurately track the changes in
            the Benchmark Oil Futures Contract.
 USOF’s
          total portfolio composition is disclosed each business day that the AMEX
          is open
          for trading on USOF’s website and through the AMEX’s website at
          http://www.amex.com. The website disclosure of portfolio holdings is made
          daily
          and includes, as applicable, the name and value of each oil interest, the
          specific types of Other Oil Interests and characteristics of such Other
          Oil
          Interests, Treasuries, and amount of the cash and/or cash equivalents held
          in
          USOF’s portfolio. USOF’s website is publicly accessible at no charge. USOF’s
          assets are held in segregation pursuant to the Commodity Exchange Act (the
          "CEA") and CFTC regulations.
 
 The
            units issued by USOF may be purchased
            only by Authorized Purchasers only in blocks of 100,000 units called
            Creation
            Baskets. The amount of the purchase payment for a Creation Basket is
            equal to
            the aggregate NAV of units in the Creation Basket. Similarly, Authorized
            Purchasers may redeem units only in blocks of 100,000 units called Redemption
            Baskets. The amount of the redemption proceeds for a Redemption Basket
            is equal
            to the aggregate NAV of units in the Redemption Basket. The purchase
            price for
            Creation Baskets and the redemption price for Redemption Baskets is the
            actual
            NAV calculated at the end of the business day when notice for a purchase
            or
            redemption is received by USOF. The AMEX publishes an approximate intra-day
            NAV based on the prior day’s NAV and the current price of Benchmark Oil
            Futures Contracts, but the basket price is determined based on the actual
            NAV at
            the end of the day.
 While
          USOF issues units only in Creation Baskets, units may also be
          purchased and sold in much smaller increments on the AMEX. These
          transactions, however, are effected at the bid and ask prices established
          by specialist firm(s). Like any listed security, units can be purchased
          and sold
          at any time a secondary market is open.


5


What
      is USOF’s Investment
      Strategy?


In
          managing USOF’s assets, the General Partner does not use a technical trading
          system that issues buy and sell orders. The General Partner instead employs
          a
          quantitative methodology whereby each time a Creation Basket is sold, the
          General Partner purchases oil interests, such as an Oil Futures Contract
          for
          light, sweet crude oil traded on the NYMEX, that have an aggregate face
          amount
          that approximates the amount of Treasuries and/or cash received upon the
          issuance of the Creation Basket.
  As
          an
          example, assume that a Creation Basket purchase order is placed on January
          2,
          2007. If one were to assume USOF’s closing NAV per unit for January 2 is $63.76,
          USOF would receive $6,376,000 for the Creation Basket ($63.76 NAV per unit
          times
          100,000 units, and ignoring the Creation Basket fee of $1,000). Assume
          that the
          price of an Oil Futures Contract for light, sweet crude oil on January 3,
          2007 is $63,770. Because the price of oil reflected in these near month
          futures
          contracts on January 3, 2007 is different (in this case, higher) than the
          price
          of oil reflected in USOF’s NAV calculated as of January 2, 2007 (the day the
          corresponding Creation Basket was sold), USOF cannot invest the entire
          purchase
          amount corresponding to the Creation Basket in futures contracts — i.e., it can
          only invest in 99 Oil Futures Contracts with an aggregate value of $6,313,230
          ($63,770 per contract times 99 contracts). Assuming a margin equal to 10%
          of the value of the Oil Futures Contracts which would require $631,323
          in
          Treasuries to be deposited as margin with the futures commission merchant
          through which the contract was purchased, the remainder of the purchase
          price
          for the Creation Basket, $5,744,677, would remain invested in Treasuries,
          cash and/or cash equivalents as determined by the General Partner from time
          to time based on factors such as potential calls for margin or anticipated
          redemptions.
 6
 The
          specific Oil Futures Contracts purchased depend on various factors, including
          a
          judgment by the General Partner as to the appropriate diversification of
          USOF’s
          investments in futures contracts with respect to the month of expiration,
          and
          the prevailing price volatility of particular contracts. While the General
          Partner has made significant investments in NYMEX Oil Futures Contracts,
          as USOF
          reaches certain position limits on the NYMEX, or for other
          reasons, it has also and may continue to invest in Oil Futures Contracts
          traded
          on other exchanges or invest in Other Oil Interests such as contracts in
          the
“over-the-counter” market.
  The
          General Partner does not anticipate letting its Oil Futures Contracts expire
          and
          taking delivery of the underlying oil. Instead, the General Partner will
          close
          existing positions when it is determined appropriate to do so and reinvest
          the
          proceeds in new Oil Futures Contracts. Positions may also be closed out
          to meet
          orders for Redemption Baskets.
  By
          remaining invested as fully as possible in Oil Futures Contracts or Other
          Oil
          Interests, the General Partner believes that the changes in percentage
          terms in
          USOF’s NAV will continue to closely track the changes in percentage terms
          in the prices of the futures contracts in which USOF invests. The General
          Partner believes that certain arbitrage opportunities result in the price
          of the
          units traded on the AMEX closely tracking the NAV of USOF. Additionally,
          as
          discussed above, the General Partner has conducted research that indicates
          that
          oil futures contracts traded on the NYMEX have closely tracked the spot
          price of
          the underlying oil. Based on these expected interrelationships, the General
          Partner believes that the changes in the price of USOF’s units as traded on the
          AMEX will continue to closely track the changes in the spot price of light,
          sweet crude oil.
  What
          are Oil Futures
          Contracts?
  Oil
          Futures Contracts are agreements between two parties. One party agrees
          to buy
          oil from the other party at a later date at a price and quantity agreed
          upon
          when the contract is made. Oil Futures Contracts are traded on futures
          exchanges, including the NYMEX. For example, the Benchmark Oil Futures
          Contract
          is traded on the NYMEX in units of 1,000 barrels.   The price of crude
          oil futures contracts traded on the NYMEX are priced by floor brokers and
          other
          exchange members both through an “open outcry” of offers to purchase or sell the
          contracts and through an electronic, screen-based system that determines
          the
          price by matching electronically offers to purchase and sell.
  Certain
          typical and significant characteristics of Oil Futures Contracts are discussed
          below. Additional risks of investing in Oil Futures Contracts are included
          in
“What are the Risk Factors Involved with an Investment in USOF?”
 Impact
            of Accountability Levels,
            Position Limits and Price Fluctuation Limits .
            Oil
            Futures Contracts include typical and significant characteristics. Most
            significantly, the CFTC and U.S. designated contract markets such as
            the NYMEX
            have established accountability levels and position limits on the maximum
            net
            long or net short futures contracts in commodity interests that any person
            or group of persons under common trading control (other than as a hedge,
            which
            an investment in USOF is not) may hold, own or control. The net position
            is the
            difference between an individual or firm’s open long contracts and open short
            contracts in any one commodity. In addition, most U.S. futures exchanges,
            such
            as the NYMEX, limit the price fluctuation for Oil Futures
            Contracts.
 7
 
 The
              accountability levels for the Benchmark Oil Futures Contract and other
              Oil
              Futures Contracts traded on the NYMEX are not a fixed ceiling, but
              rather a
              threshold above which the NYMEX may exercise greater scrutiny and control
              over
              an investor’s positions. The current accountability level for investments at any
              one time in the Benchmark Oil Futures Contract is 20,000 contracts. If USOF
              exceeds this accountability level for investments in the Benchmark
              Oil Futures
              Contract, the NYMEX will monitor USOF’s exposure and ask for further information
              on USOF’s activities, including the total size of all positions, investment
              and
              trading strategy, and the extent of USOF’s liquidity resources. If deemed
              necessary by the NYMEX, it could also order USOF to reduce its position
              back to
              the accountability level. As of December 31, 2007, USOF held 4,754
              Oil Futures
              Contracts traded on the NYMEX and 300 Oil Futures Contracts traded
              on the ICE
              Futures.
 If
            the
            NYMEX orders USOF to reduce its position back to the accountability level,
            or to
            an accountability level that the NYMEX deems appropriate for USOF, such
            an
            accountability level may impact the mix of investments in oil interests
            made by
            USOF. To illustrate, assume that the price of the Benchmark Oil Futures
            Contract
            and the unit price of USOF are each $10, and that the NYMEX has determined
            that
            USOF may not own more than 20,000 Benchmark Oil Futures Contracts. In such
            case, USOF could invest up to $2 billion of its daily net assets in the
            Benchmark Oil Futures Contract (i.e., $10 per contract multiplied by
            1,000 (a
            Benchmark Oil Futures Contract is a contract for 1,000 barrels of oil
            multiplied
            by 20,000 contracts)) before reaching the accountability level imposed
            by the
            NYMEX. Once the daily net assets of the portfolio exceed $2 billion in
            the
            Benchmark Oil Futures Contract, the portfolio may not be able
            to make any further investments in the Benchmark Oil Futures Contract,
            depending
            on whether the NYMEX imposes limits. If the NYMEX does impose limits
            at the $2
            billion level (or another level), USOF anticipates that it will invest
            the
            majority of its assets above that level in a mix of other Oil Futures
            Contracts
            or Other Oil Interests.
  In
            addition to accountability levels, the NYMEX imposes position limits
            on
            contracts held in the last few days of trading in the near month contract
            to
            expire. It is unlikely that USOF will run up against such position limits
            because USOF’s investment strategy is to change or "roll" from the near month
            contract to expire to the next month contract during one day beginning
            two weeks
            from expiration of the contract.
  U.S.
            futures exchanges, including the NYMEX, also limit the amount of price
            fluctuation for Oil Futures Contracts. For example, the NYMEX imposes
            a $10.00
            per barrel ($10,000 per contract) price fluctuation limit for Benchmark
            Oil
            Futures Contracts. This limit is initially based off the previous trading
            day’s
            settlement price. If any Benchmark Oil Futures Contract is traded, bid,
            or
            offered at the limit for five minutes, trading is halted for five minutes.
            When
            trading resumes, it begins at the point where the limit was imposed and
            the
            limit is reset to be $10.00 per barrel in either direction of that point.
            If
            another halt were triggered, the market would continue to be expanded
            by $10.00
            per barrel in either direction after each successive five-minute trading
            halt.
            There is no maximum price fluctuation limit during any one trading
            session.
  USOF
            anticipates that to the extent it invests in Oil Futures Contracts other
            than light, sweet crude oil contracts (such as futures contracts for Brent
            crude oil, natural gas, heating oil, and gasoline) and Other Oil Interests,
            it
            will invest in various non-exchange-traded derivative contracts to hedge
            the
            short-term price movements of such Oil Futures Contracts and Other Oil
            Interests
            against the current Benchmark Oil Futures Contract.
 8
 Examples
              of the position and price limits imposed are as follows:
 Futures
                      Contract
                  
                  Position
                      Accountability
                    Levels
                      and Limits
                  
                  Maximum
                      Daily
                    Price
                      FluctuationNYMEX
                      Light, Sweet Crude Oil
                  
                  Any
                      one month/all months: 20,000 net futures, but not to exceed
                      3,000
                      contracts in the last three days of trading in the spot
                      month.
                  
                  $10.00
                      per barrel ($10,000 per contract) for all months. If any contract
                      is
                      traded, bid, or offered at the limit for five minutes, trading
                      is halted
                      for five minutes. When trading resumes, the limit is expanded
                      by $10.00
                      per barrel in either direction. If another halt were triggered,
                      the market
                      would continue to be expanded by $10.00 per barrel in either
                      direction
                      after each successive five-minute trading halt. There will
                      be no maximum
                      price fluctuation limits during any one trading
                      session.ICE
                      Futures Brent Crude Futures
                  
                  There
                      are no position limits.
                  
                  There
                      is no maximum daily price fluctuation limit.ICE
                      WTI Crude Futures
                  
                  There
                      are no position limits.
                  
                  There
                      is no maximum daily price fluctuation.NYMEX
                      Heating Oil
                  
                  Any
                      one month/all months: 7,000 net futures, but not to exceed
                      1,000 contracts
                      in the last three days of trading in the spot month
                  
                  $0.25
                      per gallon ($10,500 per contract) for all months. If any contract
                      is
                      traded, bid, or offered at the limit for five minutes, trading
                      is halted
                      for five minutes. When trading resumes, the limit is expanded
                      by $0.25 per
                      gallon in either direction. If another halt were triggered,
                      the market
                      would continue to be expanded by $0.25 per gallon in either
                      direction
                      after each successive five-minute trading halt. There will
                      be no maximum
                      price fluctuation limits during any one trading
                      session.NYMEX
                      Gasoline
                  
                  Any
                      one month/all months: 7,000 net futures, but not to exceed
                      1,000 contracts
                      in the last three days of trading in the spot month.
                  
                  $0.25
                      per gallon ($10,500 per contract) for all months. If any contract
                      is
                      traded, bid, or offered at the limit for five minutes, trading
                      is halted
                      for five minutes. When trading resumes, the limit is expanded
                      by $0.25 per
                      gallon in either direction. If another halt were triggered,
                      the market
                      would continue to be expanded by $0.25 per gallon in either
                      direction
                      after each successive five-minute trading halt. There will
                      be no maximum
                      price fluctuation limits during any one trading
                      session.NYMEX
                      Natural Gas
                  
                  Any
                      one month/all months: 12,000 net futures, but not to exceed
                      1,000
                      contracts in the last three days of trading in the spot
                      month.
                  
                  $3.00
                      per mmBtu ($30,000 per contract) for all months. If any contract
                      is
                      traded, bid, or offered at the limit for five minutes, trading
                      is halted
                      for five minutes. When trading resumes, the limit is expanded
                      by $3.00 per
                      mmBtu in either direction. If another halt were triggered,
                      the market
                      would continue to be expanded by $3.00 per mmBtu in either
                      direction after
                      each successive five-minute trading halt. There will be no
                      maximum price
                      fluctuation limits during any one trading
                      session.
 9
 
 Price
          Volatility. Despite
          daily price limits, the price volatility of Oil Futures Contracts generally
          has
          been historically greater than that for traditional securities such as
          stocks
          and bonds. Price volatility often is greater day-to-day as opposed to intra-day.
          Oil Futures Contracts tend to be more volatile than stocks and bonds because
          price movements for crude oil are more currently and directly influenced
          by
          economic factors for which current data is available and are traded by
          oil
          futures traders throughout the day. These economic factors include; changes
          in
          interest rates; governmental, agricultural, trade, fiscal, monetary and
          exchange
          control programs and policies; weather and climate conditions; changing
          supply
          and demand relationships; changes in balances of payments and trade; U.S.
          and
          international rates of inflation; currency devaluations and revaluations;
          U.S.
          and international political and economic events; and changes in philosophies
          and
          emotions of market participants. Because USOF invests a significant portion
          of
          its assets in Oil Futures Contracts, the assets of USOF, and therefore
          the
          prices of USOF units, may be subject to greater volatility than traditional
          securities.
 Marking-to-Market
          Futures
          Positions. Oil Futures Contracts are marked to market at the end of each
          trading day and the margin required with respect to such contracts is adjusted
          accordingly. This process of marking-to-market is designed to prevent losses
          from accumulating in any futures account. Therefore, if USOF’s futures positions
          have declined in value, USOF may be required to post variation margin to
          cover this decline. Alternatively, if USOF futures positions have increased
          in
          value, this increase will be credited to USOF’s account.
  What
          is the Crude Oil Market and the
          Petroleum-Based Fuel Market?
  USOF
          may
          purchase Oil Futures Contracts traded on the NYMEX that are based on light,
          sweet crude oil. It may also purchase contracts on other exchanges, including
          the ICE Futures and the Singapore Exchange. The contracts provide for delivery
          of several grades of domestic and internationally traded foreign crudes,
          and,
          among other things, serves the diverse needs of the physical market.
  Light,
          Sweet Crude Oil.Light, sweet crudes are preferred by refiners because of their low
          sulfur
          content and relatively high yields of high-value products such as gasoline,
          diesel fuel, heating oil, and jet fuel. The price of light, sweet crude oil
          has historically exhibited periods of significant volatility.
  Demand
          for petroleum products by consumers, as well as agricultural, manufacturing
          and
          transportation industries, determines demand for crude oil by refiners.
          Since
          the precursors of product demand are linked to economic activity, crude
          oil
          demand will tend to reflect economic conditions. However, other factors
          such as
          weather also influence product and crude oil demand.
  Crude
          oil
          supply is determined by both economic and political factors. Oil prices
          (along
          with drilling costs, availability of attractive prospects for drilling,
          taxes
          and technology, among other factors) determine exploration and development
          spending, which influence output capacity with a lag. In the short run,
          production decisions by the Organization of Petroleum Exporting Countries
          ("OPEC") also affect supply and prices. Oil export embargoes and the current
          conflict in Iraq represent other routes through which political developments
          move the market. It is not possible to predict the aggregate effect of
          all or
          any combination of these factors.
  In
          Europe, Brent crude oil is the standard for futures contracts traded on
          the ICE
          Futures, an electronic marketplace for energy trading and price discovery.
          Brent
          crude oil is the price reference for two-thirds of the world’s traded
          oil.
 10
 Heating
          Oil.Heating oil,
          also known as No. 2 fuel oil, accounts for 25% of the yield of a barrel
          of crude
          oil, the second largest “cut” from oil after gasoline. The heating oil futures
          contract, listed and traded on the NYMEX, trades in units of 42,000 gallons
          (1,000 barrels) and is based on delivery in the New York harbor, the principal
          cash market center. The price of heating oil has historically been
          volatile.
  Gasoline.Gasoline
            is the
            largest single volume refined product sold in the U.S. and accounts for
            almost
            half of national oil consumption. The gasoline futures contract, listed
            and
            traded on the NYMEX, trades in units of 42,000 gallons (1,000 barrels)
            and is
            based on delivery at petroleum products terminals in the New York harbor,
            the
            major East Coast trading center for imports and domestic shipments from
            refineries in the New York harbor area or from the Gulf Coast refining
            centers.
            The price of gasoline has historically been volatile.
 Natural
          Gas.Natural gas
          accounts for almost a quarter of U.S. energy consumption. The natural gas
          futures contract, listed and traded on the NYMEX, trades in units of 10,000
          million British thermal units (mmBtu) and is based on delivery at the Henry
          Hub in Louisiana, the nexus of 16 intra- and interstate natural gas pipeline
          systems that draw supplies from the region’s prolific gas deposits. The
          pipelines serve markets throughout the U.S. East Coast, the Gulf Coast,
          the
          Midwest, and up to the Canadian border. The price of natural gas has
          historically been volatile.
  Why
          Does USOF Purchase and Sell Oil
          Futures Contracts?
  USOF’s
          investment objective is to have the changes in percentage terms of the
          units’
NAV reflect the changes in percentage terms of the Benchmark Oil Futures
          Contract, less USOF’s expenses. USOF invests primarily in Oil Futures Contracts.
          USOF seeks to have its aggregate NAV approximate at all times the aggregate
          face
          amount of the Oil Futures Contracts (or Other Oil Interests) USOF
          holds.
  Other
          than investing in Oil Futures Contracts and Other Oil Interests, USOF only
          invests in assets to support these investments in oil interests. At any
          given
          time, most of USOF’s investments will be in Treasuries, cash and/or cash
          equivalents that serve as segregated assets supporting USOF’s positions in
          Oil Futures Contracts and Other Oil Interests. For example, the purchase
          of an
          Oil Futures Contract with a stated value of $10 million would not require
          USOF
          to pay $10 million upon entering into the contract; rather, only a margin
          deposit, generally of 5% to 10% of the stated value of the Oil Futures
          Contract,
          would be required. To secure its Oil Futures Contract obligations, USOF
          would deposit the required margin with the futures commission merchant and
          hold, through its Custodian, Treasuries, cash and/or cash
          equivalents in an amount equal to the balance of the current market value
          of the contract, which at the contract’s inception would be $10 million minus
          the amount of the margin deposit, or $9.5 million (assuming a 5%
          margin).
  As
          a
          result of the foregoing, typically only 5% to 10% of USOF’s assets are held as
          margin in segregated accounts with the futures commission merchant. In
          addition to the Treasuries or cash it posts with the futures commission
          merchant for the Oil Futures Contracts it owns, USOF holds through the
          Custodian, Treasuries, cash and/or cash equivalents that can be posted as
          margin or as collateral to support its over-the-counter contracts. USOF
          earns
          interest income from the Treasuries and/or
          cash equivalents that it purchases, and on the cash it holds through the
          Custodian. It anticipates that the earned interest income will increase
          the NAV
          and limited partners’ capital contribution accounts. USOF reinvests the earned
          interest income, holds it in cash, or uses it to pay its expenses. If USOF
          reinvests the earned interest income, it will make investments that are
          consistent with its investment objectives.
 11
 What
          is the Flow of
          Units?


What
        are the Trading Policies of
        USOF?
  Liquidity
  USOF
        invests only in Oil Futures Contracts and Other Oil Interests that are traded
        in
        sufficient volume to permit, in the opinion of the General Partner, ease
        of
        taking and liquidating positions in these financial interests.
  Spot
        Commodities
  While
        the
        Oil Futures Contracts traded on the NYMEX can be physically settled, USOF
        does
        not intend to take or make physical delivery. USOF may from time to time
        trade
        in Other Oil Interests, including contracts based on the spot price of
        crude oil.
 12
 Leverage
  While
        USOF’s historical ratio of margin to total assets has generally ranged from
        0% to 5%, the General Partner endeavors to have the value of USOF’s Treasuries,
        cash and/or cash equivalents, whether held by USOF or posted as margin or
        collateral, at all times approximate the aggregate face value of USOF's
        obligations under its Oil Futures Contracts and Other Oil
        Interests.
  Borrowings
  Borrowings
        are not used by USOF, unless USOF is required to borrow money in the event
        of
        physical delivery, if USOF trades in cash commodities, or for short-term
        needs
        created by unexpected redemptions. USOF expects to have the value of its
        Treasuries, cash and/or cash equivalents whether held by USOF or posted as
        margin or collateral, at all times approximate the aggregate face value of
        its
        obligations under its Oil Futures Contracts and Other Oil Interests. USOF
        has
        not established and does not plan to establish credit lines.
  Pyramiding
  USOF
        has
        not and will not employ the technique, commonly known as pyramiding, in which
        the speculator uses unrealized profits on existing positions as variation
        margin
        for the purchase or sale of additional positions in the same or another
        commodity interest.
  Who
        are the Service
        Providers?
  BBH&Co.
        is the registrar and transfer agent for the units. BBH&Co. is also the
        Custodian for USOF. In this capacity, BBH&Co. holds USOF’s Treasuries,
        cash and/or cash equivalents pursuant to a custodial agreement. In
        addition, BBH&Co. performs certain administrative and accounting services
        for USOF and prepares certain Securities and Exchange Commission ("SEC")
        and
        CFTC reports on behalf of USOF. The General Partner pays BBH&Co. a fee for
        these services.
  USOF
        also
        employs a Marketing Agent. The General Partner pays the Marketing
        Agent fee of $425,000 per annum plus an incentive fee as follows: 0.00% on
        USOF’s assets from $0-500 million; 0.04% on USOF’s assets from $500 million-$4
        billion; and 0.03% on USOF’s assets in excess of $4 billion; provided, however,
        that in no event may the aggregate compensation paid to the Marketing Agent
        and
        any affiliate of the General Partner for distribution-related services in
        connection with the offering of units exceed ten percent (10%) of the gross
        proceeds of the offering.
  UBS
        Securities LLC (“UBS Securities”) is USOF’s futures commission merchant. USOF
        and UBS Securities have entered into an Institutional Futures Client Account
        Agreement. This Agreement requires UBS Securities to provide services to
        USOF in
        connection with the purchase and sale of oil interests that may be purchased
        or
        sold by or through UBS Securities for USOF’s account. USOF pays the fees of UBS
        Securities.
  UBS
        Securities’ principal business address is 677 Washington Blvd, Stamford, CT
        06901. UBS Securities is a futures clearing broker for USOF. UBS Securities
        is
        registered in the U.S. with the Financial Industry Regulatory
        Authority ("FINRA") as a broker-dealer and with the CFTC as a futures
        commission merchant. UBS Securities is a member of various U.S. futures and
        securities exchanges.
  UBS
        Securities was involved in the 2003 Global Research Analyst Settlement. This
        settlement was part of the global settlement that UBS Securities and nine
        other
        firms reached with the U.S. Securities and Exchange Commission (the "SEC"),
        FINRA, New York Stock Exchange (the "NYSE") and various state regulators.
        As
        part of the settlement, UBS Securities agreed to pay $80,000,000 divided
        among retrospective relief, for procurement of independent research and for
        investor education. UBS Securities has also undertaken to adopt enhanced
        policies and procedures reasonably designed to address potential conflicts
        of
        interest arising from research practices.
  On
          June
          27, 2007, the Office of the Secretary of the Commonwealth of Massachusetts
          filed
          an administrative complaint (the “Complaint”) and notice of adjudicatory
          proceeding, captioned In The Matter of UBS Securities, LLC, Docket No.
          E-2007-0049, which alleges, in sum and substance, that UBS Securities has
          been
          violating the Massachusetts Uniform Securities Act (the “MUSA”) and related
          regulations by providing the advisers for certain hedge funds with gifts
          and
          gratuities in the form of below market office rents, personal loans with
          below
          market interest rates, event tickets and other perks, in order to induce
          those
          hedge fund advisers to increase or retain their level of prime brokerage
          fees
          paid to UBS Securities.  The Secretary seeks to require UBS Securities
          to permanently cease and desist from conduct that violates the MUSA and
          regulations, to censure UBS Securities, to require UBS Securities to pay
          an
          administrative fine of an unspecified amount, and to find as fact the
          allegations of the Complaint.
 13
 Further,
        UBS Securities, like most large, full service investment banks and
        broker-dealers, receives inquiries and is sometimes involved in investigations
        by the SEC, FINRA, NYSE and various other regulatory organizations,
        exchanges and government agencies. UBS Securities fully cooperates with the
        authorities in all such requests. UBS
        Securities regularly discloses to FINRA arbitration awards, disciplinary
        action
        and regulatoryevents.
        These disclosures are publicly available on FINRA’s website at www.finra.org.
        Actions with respect to UBS Securities’s futures commission merchant business
        are publicly available on the website of the NFA (www.nfa.futures.org/).
  UBS
        Securities acts only as clearing broker for USOF and, as such, is paid
        commissions for executing and clearing trades on behalf of USOF. UBS
        Securities neither acts in any supervisory capacity with respect to the General
        Partner nor participates in the management of the General Partner or
        USOF.
  Currently,
        the General Partner does not employ commodity trading advisors. If, in the
        future, the General Partner does employ commodity trading advisors, it will
        choose each advisor based on arms-length negotiations and will consider the
        advisor’s experience, fees and reputation.
  Fees
          of USOF
 Fees
          and Compensation Arrangements with the General Partner and Non-Affiliated
          Service Providers*
  Service
                    Provider
                Compensation
                    Paid by the General PartnerBrown
                    Brothers Harriman & Co.,
                  Custodian
                    and Administrator
                A
                    $25,000 annual fee for its transfer agency services; and for
                    its custody,
                    fund accounting and fund administration services, the greater
                    of a minimum
                    amount of $125,000 annually or an asset-based charge of (a) 0.06%
                    for the
                    first $500 million of USOF, USNG, US12OF and USG’s net assets, (b) 0.0465%
                    for USOF, USNG, US12OF and USG’s net assets greater than $500 million but
                    less than $1 billion, and (c) and 0.035% of USOF, USNG, US12OF
                    and USG’s
                    net assets that exceed $1 billion.ALPS
                    Distributors, Inc., Marketing Agent
                425,000
                    per annum plus an incentive fee as follows: 0.0% on USOF’s assets from
                    $0-500 million; 0.04% on USOF’s assets from $500 million-$4 billion; 0.03%
                    on USOF’s assets in excess of $4
                    billion.
  *
The
          General Partner pays this
          compensation.
  Compensation
            to the General Partner
  USOF
            pays
            a management fee to the General Partner as follows:
 
 Assets
                  Management
                      FeeFirst
                      $1,000,000,000
                  0.50%
                      of NAVAfter
                      the first $1,000,000,000
                  0.20%
                      of NAV
  Fees
            are
            calculated on a daily basis (accrued at 1/365 of the applicable percentage
            of
            NAV on that day) and paid on a monthly basis.
 
 Fees
            and Compensation Arrangements between USOF and Non-Affiliated Service
            Providers**
 
 Service
                      Provider
                  Compensation
                      Paid by USOFUBS
                      Securities LLC, Futures Commission Merchant
                  Approximately
                      $3.50 per buy or sellNon-Affiliated
                      Brokers
                  Approximately
                      0.16% of assets
  **USOF
            pays this
            compensation.
  New
            York Mercantile Exchange Licensing Fee***
 
 Assets
                  Licensing
                      FeeFirst
                      $1,000,000,000
                  0.04%
                      of NAVAfter
                      the first $1,000,000,000
                  0.02%
                      of NAV
 
 ***
                  Fees
                      are calculated on a daily basis (accrued at 1/365 of the applicable
                      percentage of NAV on that day) and paid on a monthly basis.
                      USOF is
                      responsible for its pro rata share of the assets held by USOF,
                      USNG,
                      US12OF and USG as well as other funds managed by the General Partner,
                      including US12NG and USHO, when and if such funds commence
                      operations.
 14
  Expenses
            Paid by USOF through December 31, 2007 in dollar terms:
 
 Expenses
                  Amount
                      in Dollar TermsAmount
                      Paid to General Partner:
                  $3,622,613Amount
                      Paid in Portfolio Brokerage Commissions:
                  $1,184,956Other
                      Amounts Paid or Accrued:
                  $1,530,281Total
                      Expenses Paid or Accrued:
                  $6,337,850
 
 
 Expenses
            Paid by USOF through December 31, 2007 as a Percentage of Average Daily
            Net
            Assets:
 
 Expenses
                  Amount
                      as a Percentage of Average DailyNet
                      AssetsGeneral
                      Partner
                  0.50%
                      annualizedPortfolio
                      Brokerage Commissions
                  0.16%
                      annualizedOther
                      Amounts Paid or Accrued
                  0.21%
                      annualizedTotal
                      Expense Ratio
                  0.87%
                      annualized
  Form
          of Units
  Registered
          Form .
          Units
          are issued in registered form in accordance with the LP Agreement. The
          Administrator has been appointed registrar and transfer agent for the purpose
          of
          transferring units in certificated form. The Administrator keeps a record
          of all
          holders of the units in the registry (the “Register”). The General Partner
          recognizes transfers of units in certificated form only if done in accordance
          with the LP Agreement. The beneficial interests in such units are held
          in
          book-entry form through participants and/or accountholders in the Depository
          Trust Company ("DTC").
  Book
          Entry .
          Individual certificates are not issued for the units. Instead, units are
          represented by one or more global certificates, which are deposited by
          the
          Administrator with DTC and registered in the name of Cede & Co., as nominee
          for DTC. The global certificates evidence all of the units outstanding
          at any
          time. Unitholders are limited to (1) participants in DTC such as banks,
          brokers, dealers and trust companies ("DTC Participants"), (2) those who
          maintain, either directly or indirectly, a custodial relationship with
          a DTC
          Participant ("Indirect Participants"), and (3) those banks, brokers,
          dealers, trust companies and others who hold interests in the units through
          DTC
          Participants or Indirect Participants, in each case who satisfy the requirements
          for transfers of units. DTC Participants acting on behalf of investors
          holding
          units through such participants’ accounts in DTC will follow the delivery
          practice applicable to securities eligible for DTC’s Same-Day Funds Settlement
          System. Units are credited to DTC Participants’ securities accounts following
          confirmation of receipt of payment.
  DTC .
          DTC is
          a limited purpose trust company organized under the laws of the State of
          New
          York and is a member of the Federal Reserve System, a “clearing corporation”
within the meaning of the New York Uniform Commercial Code and a “clearing
          agency” registered pursuant to the provisions of Section 17A of the Securities
          Exchange Act of 1934, as amended (the “Exchange Act”). DTC holds securities for
          DTC Participants and facilitates the clearance and settlement of transactions
          between DTC Participants through electronic book-entry changes in accounts
          of
          DTC Participants.
 15
 Transfer
          of Units
  Transfers
          of Units Only Through
          DTC. The units are only transferable through the book-entry
          system
          of DTC. Limited partners who are not DTC Participants may transfer their
          units
          through DTC by instructing the DTC Participant holding their units (or
          by
          instructing the Indirect Participant or other entity through which their
          units
          are held) to transfer the units. Transfers are made in accordance with
          standard
          securities industry practice.
  Transfers
          of interests in units with DTC will be made in accordance with the usual
          rules
          and operating procedures of DTC and the nature of the transfer. DTC has
          established procedures to facilitate transfers among the participants and/or
          accountholders of DTC. Because DTC can only act on behalf of DTC Participants,
          who in turn act on behalf of Indirect Participants, the ability of a person
          or
          entity having an interest in a global certificate to pledge such interest
          to
          persons or entities that do not participate in DTC, or otherwise take actions
          in
          respect of such interest, may be affected by the lack of a definitive security
          in respect of such interest.
  DTC
          has
          advised us that it will take any action permitted to be taken by a unitholder
          (including, without limitation, the presentation of a global certificate
          for
          exchange) only at the direction of one or more DTC Participants in whose
          account
          with DTC interests in global certificates are credited and only in respect
          of
          such portion of the aggregate principal amount of the global certificate
          as to
          which such DTC Participant or Participants has or have given such
          direction.
  Transfer/Application
          Requirements. All purchasers of USOF’s units, and potentially any
          purchasers of units in the future, who wish to become limited partners
          or other
          record holders and receive cash distributions, if any, or have certain
          other
          rights, must deliver an executed transfer application in which the purchaser
          or
          transferee must certify that, among other things, he, she or it agrees
          to be
          bound by USOF’s LP Agreement and is eligible to purchase USOF’s securities. Each
          purchaser of units must execute a transfer application and certification.
          The
          obligation to provide the form of transfer application will be imposed
          on the
          seller of units or, if a purchase of units is made through an exchange,
          the form
          may be obtained directly through USOF. Further, the General Partner may
          request
          each record holder to furnish certain information, including that holder’s
          nationality, citizenship or other related status. A record holder is a
          unitholder that is, or has applied to be, a limited partner. An investor
          who is
          not a U.S. resident may not be eligible to become a record holder or one
          of the
          USOF’s limited partners if that investor’s ownership would subject USOF to the
          risk of cancellation or forfeiture of any of USOF’s assets under any federal,
          state or local law or regulation. If the record holder fails to furnish
          the
          information or if the General Partner determines, on the basis of the
          information furnished by the holder in response to the request, that such
          holder
          is not qualified to become one of USOF’s limited partners, the General Partner
          may be substituted as a holder for the record holder, who will then be
          treated
          as a non-citizen assignee, and USOF will have the right to redeem those
          securities held by the record holder.
  A
          transferee’s broker, agent or nominee may complete, execute and deliver a
          transfer application and certification. USOF may, at its discretion, treat
          the
          nominee holder of a unit as the absolute owner. In that case, the beneficial
          holder’s rights are limited solely to those that it has against the nominee
          holder as a result of any agreement between the beneficial owner and the
          nominee
          holder.
  A
          person
          purchasing USOF’s existing units, who does not execute a transfer application
          and certify that the purchaser is eligible to purchase those securities
          acquires
          no rights in those securities other than the right to resell those securities.
          Whether or not a transfer application is received or the consent of the
          General
          Partner obtained, our units will be securities and will be transferable
          according to the laws governing transfers of securities.
 16
 Any
          transfer of units will not be recorded by the transfer agent or recognized
          by
          the General Partner unless a completed transfer application is delivered
          to the
          General Partner or the Administrator. When acquiring units, the transferee
          of
          such units that complete a transfer application will:
  · be
          an
          assignee until admitted as a substituted limited partner upon the consent
          and
          sole discretion of the General Partner and the recording of the assignment
          on
          the books and records of the partnership;
 · automatically
          request admission as a substituted limited partner;
 · agree
          to
          be bound by the terms and conditions of, and execute, our LP
          Agreement;
 · represent
          that such transferee has the capacity and authority to enter into our LP
          Agreement;
 · grant
          powers of attorney to our General Partner and any liquidator of us;
          and
 · make
          the
          consents and waivers contained in our LP Agreement.
  An
          assignee will become a limited partner in respect of the transferred units
          upon
          the consent of our General Partner and the recordation of the name of the
          assignee on our books and records. Such consent may be withheld in the
          sole
          discretion of our General Partner.
  If
          consent of the General Partner is withheld, such transferee shall be an
          assignee. An assignee shall have an interest in the partnership equivalent
          to
          that of a limited partner with respect to allocations and distributions,
          including, without limitation, liquidating distributions, of the partnership.
          With respect to voting rights attributable to units that are held by assignees,
          the General Partner shall be deemed to be the limited partner with respect
          thereto and shall, in exercising the voting rights in respect of such units
          on
          any matter, vote such units at the written direction of the assignee who
          is the
          record holder of such units. If no such written direction is received,
          such
          units will not be voted. An assignee shall have no other rights of a limited
          partner.
  Until
          a
          unit has been transferred on our books, we and the transfer agent may treat
          the
          record holder of the unit as the absolute owner for all purposes, except
          as
          otherwise required by law or stock exchange regulations.
  Withdrawal
          of Limited
          Partners
  As
          discussed in the LP Agreement, if the General Partner gives at least fifteen
          (15) days’ written notice to a limited partner, then the General Partner may for
          any reason, in its sole discretion, require any such limited partner to
          withdraw
          entirely from the partnership or to withdraw a portion of its partner capital
          account. If the General Partner does not give at least fifteen (15) days’
written notice to a limited partner, then it may only require withdrawal
          of all
          or any portion of the capital account of any limited partner in the following
          circumstances: (i) the unitholder made a misrepresentation to the General
          Partner in connection with its purchase of units; or (ii) the limited
          partner’s ownership of units would result in the violation of any law or
          regulations applicable to the partnership or a partner. In these circumstances,
          the General Partner without notice may require the withdrawal at any time,
          or
          retroactively. The limited partner thus designated shall withdraw from
          the
          partnership or withdraw that portion of its partner capital account specified,
          as the case may be, as of the close of business on such date as determined
          by
          the General Partner. The limited partner thus designated shall be deemed
          to have
          withdrawn from the partnership or to have made a partial withdrawal from
          its
          partner capital account, as the case may be, without further action on
          the part
          of the limited partner and the provisions of the LP Agreement shall
          apply.
 17
 Calculating
          NAV
  USOF’s
          NAV is calculated by:
  ·
                Taking
                    the current market value of its total
                    assets
 ·
                Subtracting
                    any liabilities
  The
          Administrator calculates the NAV of USOF once each trading day. The NAV
          for a
          particular trading day is released after 4:15 p.m. New York time. It calculates
          the NAV as of the earlier of the close of the NYSE or 4:00 p.m. New York
          time.
          Trading on the AMEX typically closes at 4:15 p.m. New York time. USOF uses
          the
          NYMEX closing price (determined at the earlier of the close of the NYMEX
          or 2:30
          p.m. New York time) for the contracts held on the NYMEX, but calculates
          or
          determines the value of all other USOF investments as of the earlier of
          the
          close of the NYSE or 4:00 p.m. New York time.
  In
          addition, in order to provide updated information relating to USOF for
          use by
          investors and market professionals, the AMEX calculates and disseminates
          throughout the trading day an updated indicative fund value. The indicative
          fund
          value is calculated by using the prior day’s closing NAV per unit of USOF as a
          base and updating that value throughout the trading day to reflect changes
          in
          the most recently reported trade price for the Benchmark Oil Futures Contracts
          on the NYMEX. The prices reported for the active Benchmark Oil Futures
          Contract
          month are adjusted based on the prior day’s spread differential between
          settlement values for that contract and the spot month contract. In the
          event
          that the spot month contract is also the active contract, the last sale
          price
          for the active contract is not adjusted. The indicative fund value unit
          basis
          disseminated during AMEX trading hours should not be viewed as an actual
          real
          time update of the NAV, because the NAV is calculated only once at the
          end of
          each trading day.
  The
          indicative fund value is disseminated on a per unit basis every 15 seconds
          during regular AMEX trading hours of 9:30 a.m. New York time to 4:15 p.m.
          New
          York time. The normal trading hours of the NYMEX are 10:00 a.m. New York
          time to
          2:30 p.m. New York time. This means that there is a gap in time at the
          beginning
          and the end of each day during which USOF’s units are traded on the AMEX, but
          real-time NYMEX trading prices for oil futures contracts traded on the
          NYMEX are
          not available. As a result, during those gaps there will be no update to
          the
          indicative fund value.
  The
          AMEX
          disseminates the indicative fund value through the facilities of CTA/CQ
          High
          Speed Lines. In addition, the indicative fund value is published on the
          AMEX’s
          website and is available through on-line information services such as Bloomberg
          and Reuters.
  Dissemination
          of the indicative fund value provides additional information that is not
          otherwise available to the public and is useful to investors and market
          professionals in connection with the trading of USOF units on the AMEX.
          Investors and market professionals are able throughout the trading day
          to
          compare the market price of USOF and the indicative fund value. If the
          market
          price of USOF units diverges significantly from the indicative fund value,
          market professionals will have an incentive to execute arbitrage trades.
          For
          example, if USOF appears to be trading at a discount compared to the indicative
          fund value, a market professional could buy USOF units on the AMEX and
          sell
          short oil futures contracts. Such arbitrage trades can tighten the tracking
          between the market price of USOF and the indicative fund value and thus
          can be
          beneficial to all market participants.
  In
          addition, other Oil Futures Contracts, Other Oil Interests and Treasuries
          held
          by USOF are valued by the Administrator, using rates and points received
          from
          client approved third party vendors (such as Reuters and WM Company) and
          advisor
          quotes. These investments are not included in the indicative value. The
          indicative fund value is based on the prior day’s NAV and moves up and down
          according solely to changes in the average of the prices of the Benchmark
          Oil
          Futures Contract.
 18
 Creation
          and Redemption of
          Units
  USOF
          creates and redeems units from time to time, but only in one or more Creation
          Baskets or Redemption Baskets. The creation and redemption of baskets are
          only
          made in exchange for delivery to USOF or the distribution by USOF of the
          amount
          of Treasuries and any cash represented by the baskets being created or
          redeemed,
          the amount of which is based on the combined NAV of the number of units
          included
          in the baskets being created or redeemed determined as of 4:00 p.m. New
          York
          time on the day the order to create or redeem baskets is properly
          received.
  Authorized
          Purchasers are the only persons that may place orders to create and redeem
          baskets. Authorized Purchasers must be (1) registered broker-dealers or
          other
          securities market participants, such as banks and other financial institutions,
          that are not required to register as broker-dealers to engage in securities
          transactions as described below, and (2) DTC Participants. To become an
          Authorized Purchaser, a person must enter into an Authorized Purchaser
          Agreement
          with the General Partner. The Authorized Purchaser Agreement provides the
          procedures for the creation and redemption of baskets and for the delivery
          of
          the Treasuries and any cash required for such creations and redemptions.
          The
          Authorized Purchaser Agreement and the related procedures attached thereto
          may
          be amended by USOF, without the consent of any limited partner or unitholder
          or
          Authorized Purchaser. Authorized Purchasers pay a transaction fee of $1,000
          to
          USOF for each order they place to create or redeem one or more baskets.
          Authorized Purchasers who make deposits with USOF in exchange for baskets receive
          no fees, commissions or other form of compensation or inducement of any
          kind
          from either USOF or the General Partner, and no such person will have any
          obligation or responsibility to the General Partner or USOF to effect any
          sale
          or resale of units. As of December 31, 2007, 8 Authorized Purchasers had
          entered
          into agreements with USOF to purchase Creation Baskets.
  Certain
            Authorized Purchasers are expected to have the facility to participate
            directly
            in the physical crude oil market and the crude oil futures market. In
            some
            cases, an Authorized Purchaser or its affiliates may from time to time
            acquire
            crude oil or sell crude oil and may profit in these instances. The General
            Partner believes that the size and operation of the crude oil market
            make it
            unlikely that an Authorized Purchaser’s direct activities in the crude oil or
            securities markets will impact the price of crude oil, Oil Futures Contracts,
            or
            the price of the units.
  Each
          Authorized Purchaser is required to be registered as a broker-dealer under
          the
          Exchange Act and is a member in good standing with FINRA, or exempt from
          being
          or otherwise not required to be licensed as a broker-dealer or a member
          of
          FINRA, and qualified to act as a broker or dealer in the states or other
          jurisdictions where the nature of its business so requires. Certain Authorized
          Purchasers may also be regulated under federal and state banking laws and
          regulations. Each Authorized Purchaser has its own set of rules and procedures,
          internal controls and information barriers as it determines is appropriate
          in
          light of its own regulatory regime.
  Under
          the
          Authorized Purchaser Agreement, the General Partner has agreed to indemnify
          the
          Authorized Purchasers against certain liabilities, including liabilities
          under
          the Securities Act of 1933, as amended, and to contribute to the payments
          the
          Authorized Purchasers may be required to make in respect of those
          liabilities.
  The
          following description of the procedures for the creation and redemption
          of
          baskets is only a summary and an investor should refer to the relevant
          provisions of the LP Agreement and the form of Authorized Purchaser Agreement
          for more detail, each of which is attached as an exhibit to this annual
          report
          on Form 10-K.
  Creation
          Procedures
  On
          any
          business day, an Authorized Purchaser may place an order with the Marketing
          Agent to create one or more baskets. For purposes of processing purchase
          and
          redemption orders, a “business day” means any day other than a day when any of
          the AMEX, the NYMEX or the NYSE is closed for regular trading. Purchase
          orders
          must be placed by 12:00 p.m. New York time or the close of regular trading
          on
          the AMEX, whichever is earlier; except in the case of the initial Authorized
          Purchaser’s or any other Authorized Purchaser’s initial order to purchase one or
          more Creation Baskets on the first day the baskets are to be offered and
          sold,
          when such orders shall be placed by 9:00 a.m. New York time on the day
          agreed to
          by the General Partner and the initial Authorized Purchaser. The day on
          which
          the Marketing Agent receives a valid purchase order is the purchase order
          date.
  By
          placing a purchase order, an Authorized Purchaser agrees to deposit Treasuries,
          cash, or a combination of Treasuries and cash with USOF, as described below.
          Prior to the delivery of baskets for a purchase order, the Authorized Purchaser
          must also have wired to the Custodian the non-refundable transaction fee
          due for
          the purchase order. Authorized Purchasers may not withdraw a creation
          request.
  Determination
            of Required Deposits
 
 The
            total deposit required to create each basket (“Creation Basket Deposit”) is the
            amount of Treasuries and/or cash that is in the same proportion to the
            total
            assets of USOF (net of estimated accrued but unpaid fees, expenses and
            other
            liabilities) on the date the order to purchase is accepted as the number
            of
            units to be created under the purchase order is in proportion to the
            total
            number of units outstanding on the date the order is received. The General
            Partner determines, directly in its sole discretion or in consultation
            with the
            Administrator, the requirements for Treasuries and the amount of cash,
            including
            the maximum permitted remaining maturity of a Treasury and proportions
            of
            Treasury and cash that may be included in deposits to create baskets.
            The
            Marketing Agent publishes such requirements at the beginning of each
            business
            day. The amount of cash deposit required is the difference between the
            aggregate
            market value of the Treasuries required to be included in a Creation
            Basket
            Deposit as of 4:00 p.m. New York time on the date the order to purchase
            is
            properly received and the total required deposit.
 
 Delivery
            of Required Deposits
 
 An
            Authorized Purchaser who places a purchase order is responsible for transferring
            to USOF’s account with the Custodian the required amount of Treasuries and cash
            by the end of the third business day following the purchase order date.
            Upon
            receipt of the deposit amount, the Administrator directs DTC to credit
            the
            number of baskets ordered to the Authorized Purchaser’s DTC account on the third
            business day following the purchase order date. The expense and risk
            of delivery
            and ownership of Treasuries until such Treasuries have been received
            by the
            Custodian on behalf of USOF shall be borne solely by the Authorized
            Purchaser.
  Because
            orders to purchase baskets must be placed by 12:00 p.m., New York time,
            but the
            total payment required to create a basket during the continuous offering
            period
            will not be determined until 4:00 p.m., New York time, on the date the
            purchase
            order is received, Authorized Purchasers will not know the total amount
            of the
            payment required to create a basket at the time they submit an irrevocable
            purchase order for the basket. USOF’s NAV and the total amount of the payment
            required to create a basket could rise or fall substantially between
            the time an
            irrevocable purchase order is submitted and the time the amount of the
            purchase
            price in respect thereof is determined.
 19
 Rejection
            of Purchase Orders
 
 The
            General Partner acting by itself or through the Marketing Agent may reject
            a
            purchase order or a Creation Basket Deposit if:
 
 ·
                  it
                      determines that the investment alternative available to USOF
                      at that time
                      will not enable it to meet its investment
                      objective;
 ·
                  it
                      determines that the purchase order or the Creation Basket Deposit
                      is not
                      in proper form;
 ·
                  it
                      believes that the purchase order or the Creation Basket Deposit
                      would have
                      adverse tax consequences to USOF or its
                      unitholders;
 ·
                  the
                      acceptance or receipt of the Creation Basket Deposit would,
                      in the opinion
                      of counsel to the General Partner, be unlawful;
                      or
 ·
                  circumstances
                      outside the control of the General Partner, Marketing Agent
                      or Custodian
                      make it, for all practical purposes, not feasible to process
                      creations of
                      baskets.
  None
            of the General Partner, Marketing Agent or Custodian will be liable for
            the
            rejection of any purchase order or Creation Basket Deposit.
 Redemption
          Procedures
  The
          procedures by which an Authorized Purchaser can redeem one or more baskets
          mirror the procedures for the creation of baskets. On any business day,
          an
          Authorized Purchaser may place an order with the Marketing Agent to redeem
          one
          or more baskets. Redemption orders must be placed by 12:00 p.m. New York
          time or
          the close of regular trading on the AMEX, whichever is earlier. A redemption
          order so received will be effective on the date it is received in satisfactory
          form by the Marketing Agent. The redemption procedures allow Authorized
          Purchasers to redeem baskets and do not entitle an individual unitholder
          to
          redeem any units in an amount less than a basket, or to redeem baskets
          other
          than through an Authorized Purchaser. By placing a redemption order, an
          Authorized Purchaser agrees to deliver the baskets to be redeemed through
          DTC’s
          book-entry system to USOF not later than 3:00 p.m. New York time on the
          third
          business day following the effective date of the redemption order. Prior
          to the
          delivery of the redemption distribution for a redemption order, the Authorized
          Purchaser must also have wired to USOF’s account at the Custodian the
          non-refundable transaction fee due for the redemption order. Authorized
          Purchasers may not withdraw a redemption request.
  Determination
            of Redemption Distribution
 
 The
            redemption distribution from USOF consists of a transfer to the redeeming
            Authorized Purchaser of an amount of Treasuries and/or cash that is in
            the same
            proportion to the total assets of USOF (net of estimated accrued but
            unpaid
            fees, expenses and other liabilities) on the date the order to redeem
            is
            properly received as the number of units to be redeemed under the redemption
            order is in proportion to the total number of units outstanding on the
            date the
            order is received. The General Partner, directly or in consultation with
            the
            Administrator, determines the requirements for Treasuries and the amounts
            of
            cash, including the maximum permitted remaining maturity of a Treasury,
            and the
            proportions of Treasuries and cash that may be included in distributions
            to
            redeem baskets. The Marketing Agent publishes such requirements as of
            4:00 p.m.
            New York time on the redemption order date.
 
 Delivery
            of Redemption Distribution
 
 The
            redemption distribution due from USOF will be delivered to the Authorized
            Purchaser by 3:00 p.m. New York time on the third business day following
            the
            redemption order date if, by 3:00 p.m. New York time on such third business
            day,
            USOF’s DTC account has been credited with the baskets to be redeemed. If USOF’s
            DTC account has not been credited with all of the baskets to be redeemed
            by such
            time, the redemption distribution will be delivered to the extent of
            whole
            baskets received. Any remainder of the redemption distribution will be
            delivered
            on the next business day to the extent of remaining whole baskets received
            if
            USOF receives the fee applicable to the extension of the redemption distribution
            date which the General Partner may, from time to time, determine and
            the
            remaining baskets to be redeemed are credited to USOF’s DTC account by 3:00 p.m.
            New York time on such next business day. Any further outstanding amount
            of the
            redemption order shall be cancelled. Pursuant to information from the
            General
            Partner, the Custodian will also be authorized to deliver the redemption
            distribution notwithstanding that the baskets to be redeemed are not
            credited to
            USOF’s DTC account by 3:00 p.m. New York time on the third business day
            following the redemption order date if the Authorized Purchaser has
            collateralized its obligation to deliver the baskets through DTC’s book
            entry-system on such terms as the General Partner may from time to time
            determine.
 
 Suspension
            or Rejection of Redemption Orders
 
 The
            General Partner may, in its discretion, suspend the right of redemption,
            or
            postpone the redemption settlement date, (1) for any period during which
            the
            AMEX or the NYMEX is closed other than customary weekend or holiday closings,
            or
            trading on the AMEX or the NYMEX is suspended or restricted, (2) for
            any period
            during which an emergency exists as a result of which delivery, disposal
            or
            evaluation of Treasuries is not reasonably practicable, or (3) for such
            other
            period as the General Partner determines to be necessary for the protection of
            the limited partners. None of the General Partner, the Marketing Agent,
            the
            Administrator, or the Custodian will be liable to any person or in any
            way for
            any loss or damages that may result from any such suspension or
            postponement.
 
 The
            General Partner will reject a redemption order if the order is not in
            proper
            form as described in the Authorized Purchaser Agreement or if the fulfillment
            of
            the order, in the opinion of its counsel, might be unlawful.
  Creation
          and Redemption Transaction
          Fee
  To
          compensate USOF for its expenses in connection with the creation and redemption
          of baskets, an Authorized Purchaser is required to pay a transaction fee
          to USOF
          of $1,000 per order to create or redeem baskets. An order may include multiple
          baskets. The transaction fee may be reduced, increased or otherwise changed
          by
          the General Partner. The General Partner shall notify DTC of any change
          in the
          transaction fee and will not implement any increase in the fee for the
          redemption of baskets until 30 days after the date of the
          notice.
  Tax
          Responsibility
  Authorized
          Purchasers are responsible for any transfer tax, sales or use tax, stamp
          tax,
          recording tax, value added tax or similar tax or governmental charge applicable
          to the creation or redemption of baskets, regardless of whether or not
          such tax
          or charge is imposed directly on the Authorized Purchaser, and agree to
          indemnify the General Partner and USOF if they are required by law to pay
          any
          such tax, together with any applicable penalties, additions to tax or interest
          thereon.
  Secondary
          Market
          Transactions
  As
          noted,
          USOF will create and redeem units from time to time, but only in one or
          more
          Creation Baskets or Redemption Baskets. The creation and redemption of
          baskets
          will only be made in exchange for delivery to USOF or
          the
          distribution by USOF of the amount of Treasuries and cash represented by
          the
          baskets being created or redeemed, the amount of which will be based on
          the
          aggregate NAV of the number of units included in the baskets being created
          or
          redeemed determined on the day the order to create or redeem baskets is
          properly
          received.
 20
 As
          discussed above, Authorized Purchasers are the only persons that may place
          orders to create and redeem baskets. Authorized Purchasers must be registered
          broker-dealers or other securities market participants, such as banks and
          other
          financial institutions that are not required to register as broker-dealers
          to
          engage in securities transactions. An Authorized Purchaser is under no
          obligation to create or redeem baskets, and an Authorized Purchaser is
          under no
          obligation to offer to the public units of any baskets it does create.
          Authorized Purchasers that do offer to the public units from the baskets
          they
          create will do so at per-unit offering prices that are expected to reflect,
          among other factors, the trading price of the units on the AMEX, the NAV
          of USOF
          at the time the Authorized Purchaser purchased the Creation Baskets and
          the NAV
          of the units at the time of the offer of the units to the public, the supply
          of
          and demand for units at the time of sale, and the liquidity of the Oil
          Futures
          Contract market and the market for Other Oil Interests. The prices of units
          offered by Authorized Purchasers are expected to fall between USOF’s NAV and the
          trading price of the units on the AMEX at the time of sale. Units initially
          comprising the same basket but offered by Authorized Purchasers to the
          public at
          different times may have different offering prices. An order for one or
          more
          baskets may be placed by an Authorized Purchaser on behalf of multiple
          clients.
          Authorized Purchasers who make deposits with USOF in exchange for baskets
          receive no fees, commissions or other form of compensation or inducement
          of any
          kind from either USOF or the General Partner, and no such person has any
          obligation or responsibility to the General Partner or USOF to effect any
          sale
          or resale of units. Units are expected to trade in the secondary market
          on the
          AMEX. Units may trade in the secondary market at prices that are lower
          or higher
          relative to their NAV per unit. The amount of the discount or premium in
          the
          trading price relative to the NAV per unit may be influenced by various
          factors,
          including the number of investors who seek to purchase or sell units in
          the
          secondary market and the liquidity of the Oil Futures Contracts market
          and the
          market for Other Oil Interests. While the units trade on the AMEX until
          4:15
          p.m. New York time, liquidity in the market for Oil Futures Contracts and
          Other
          Oil Interests may be reduced after the close of the NYMEX at 2:30 p.m.
          New York
          time. As a result, during this time, trading spreads, and the resulting
          premium
          or discount, on the units may widen.
  Prior
          Performance of USOF and
          Affiliates
  USOF’s
          offering began on April 10, 2006 and is a continuous offering. As of
          December 31, 2007, the total amount of money raised by USOF from Authorized
          Purchasers was $6,142,802,106;
          the total number of Authorized Purchasers was 12, the number of baskets
          purchased by Authorized Purchasers was 1,074; and the aggregate amount
          of units
          purchased was 107.4 million. For more information on the performance of
          USOF,
          see the Performance Tables below.
  PAST
          PERFORMANCE IS NOT NECESSARILY
          INDICATIVE OF FUTURE RESULTS
  Experience
          in Raising and Investing
          in Funds through
          December 31, 2007
  Dollar
                    Amount Offered:
                $
                7,094,860,000Dollar
                    Amount Raised:
                $
                6,142,801,105Offering
                    Expenses*:SEC
                    registration fee**:
                $
                800,474FINRA fee**:
                $
                377,500AMEX
                    Listing fee**:
                $
                5,000Auditor's
                    fees and expenses**:
                $
                59,000Legal
                    fees and expenses**:
                $
                1,249,109Printing
                    expenses:
                $
                241,977Length
                    of Offering:
                
                Continuous
 ——————
 *  
          Amounts are for organizational and offering expenses incurred in connection
          with
          the offerings from April 10, 2006 through December 31, 2007.
 ** Paid
          for
          by the General Partner in connection with the initial public
          offering.
  Performance
          Capsule
 Name
                      of Commodity Pool:
                  
                  USOFType
                      of Commodity Pool:
                  
                  Exchange
                      traded securityInception
                      of Trading:
                  
                  April
                      10, 2006Aggregate
                      Gross Capital Subscriptions (from inception through
                      December 31, 2007):
                  
                  $
                  6,142,801,105Total
                      Net Assets as of December 31, 2007:
                  
                  $
                  485,222,737
                  *Initial
                      NAV Per Unit as of Inception:
                  
                  $
                  67.39NAV
                      per Unit as of December 31, 2007:
                  
                  $
                  75.82Worst
                      Monthly Percentage Draw-down:
                  
                  
                  September
                      2006 (11.71
                  %)Worst
                      Peak-to-Valley Draw-down:
                  
                  
                  June
                      2006-January 2007 (30.60
                  %)Total
                      Rate of Return Since Inception:
                  
                  
                  12.51
                  %
 ——————
 * Inclusive
            of transactions recorded on a trade date + 1 basis.
 PAST
          PERFORMANCE IS NOT NECESSARILY
          INDICATIVE OF FUTURE RESULTS
 
 Month
                
                Rates of Return
                  For the Year 2007January
                
                
                (6.55
                %)February
                
                
                5.63
                %March
                
                
                4.61
                %April
                
                
                (4.26
                %)May
                
                
                (4.91
                %)June
                
                
                9.06
                %July
                
                
                10.57
                %August
                
                
                (4.95
                %)September
                
                
                12.11
                %October
                
                
                16.98
                %November
                
                
                (4.82
                %)December
                
                
                8.67
                %
 21
 The
          General Partner is also currently the general partner of US12OF, USNG and
          USG.
          Each of the General Partner, USNG, US12OF and USG is located in
          California.
 US12OF
            is
            a publicly traded limited partnership which seeks to have the changes
            in
            percentage terms of  its units’ NAV track the changes in percentage
            terms of the price of light, sweet crude oil delivered to Cushing, Oklahoma,
            as
            measured by the changes in the average of the prices of 12 futures contracts
            on
            crude oil traded on the NYMEX, consisting of the near month contract
            to expire
            and the contracts for the following 11 months for a total of 12 consecutive
            months’ contracts, except when the near month contract is within two weeks of
            expiration, in which case it will be measured by the futures contracts
            that are
            the next month contract to expire and the contracts for the following
            11
            consecutive months, less US12OF’s expenses.  US12OF invests in a
            mixture of listed crude oil futures contracts, other non-listed oil related
            investments, Treasuries, cash and cash equivalents.  US12OF began
            trading on the AMEX on December 6, 2007 and is a continuous
            offering.  As of December 31, 2007, the total amount of money raised
            by US12OF from Authorized Purchasers was $20,127,316; the total number
            of
            Authorized Purchasers was 2; the number of baskets purchased by Authorized
            Purchasers was 4; and the aggregate amount of units purchased was
            400,000.
 USNG
              is a
              publicly traded limited partnership which seeks to have the changes
              in
              percentage terms of its unit’s NAV track the changes in percentage terms of the
              price of natural gas delivered at the Henry Hub, Louisiana as measured by
              the futures contract on natural gas traded on the NYMEX, less USNG's
              expenses. USNG invests in a mixture of listed natural gas futures contracts,
              other natural gas related investments, Treasuries, cash and cash equivalents.
              USNG began trading on the AMEX on April 18, 2007 and is a continuous
              offering.  As of December 31, 2007, the total amount of money raised
              by USNG from Authorized Purchasers was $1,458,787,976; the total number
              of
              Authorized Purchasers was 4; the number of baskets purchased by Authorized
              Purchasers was 379; and the aggregate amount of units purchased was
              37,900,000.
  USG
        is a publicly traded limited partnership which
        seeks to have the changes in percentage terms of its units’ NAV track the
        changes in percentage terms of the price of unleaded gasoline delivered to
        the
        New York harbor, as measured by the changes in the price of the futures contract
        on gasoline traded on the NYMEX, less USG’s expenses.  USG invests in
        a mixture of listed gasoline futures contracts, other gasoline related
        investments, Treasuries, cash and cash equivalents.  USG began trading
        on the AMEX on February 26, 2008 and is a continuous offering.  During
        the year ended December 31, 2007, USG had not yet commenced investment
        activities nor issued units.
  Since
            the
            offering of US12OF units to the public on December 6, 2007 to December
            31, 2007,
            the simple average daily change in its benchmark oil futures contract
            was
            0.480%, while the simple average daily change in the NAV of US12OF over
            the same
            time period was 0.489%. The average daily difference was 0.009% (or 0.9
            basis
            point, where 1 basis point equals 1/100 of 1%). As a percentage of the
            daily
            movement of the benchmark oil futures contract, the average error in
            daily
            tracking by the NAV was 2.651%, meaning that over this time period US12OF’s
            tracking error was within the plus or minus 10% range established as
            its
            benchmark tracking goal.
 
 Since
            the
            offering of USNG units to the public on April 18, 2007 to December 31,
            2007, the
            simple average daily change in its benchmark futures contract was -0.154%,
            while
            the simple average daily change in the NAV of USNG over the same time
            period was
            -0.143%. The average daily difference was 0.012% (or 1.2 basis points,
            where 1
            basis point equals 1/100 of 1% ). As a percentage of the daily movement of
            the benchmark futures contract, the average error in daily tracking by
            the NAV
            was 1.994%, meaning that over this time period USNG’s tracking error was within
            the plus or minus 10% range established as its benchmark tracking
            goal.
 
 There
            are
            significant differences between investing in US12OF and USNG and investing
            directly in the futures market. The General Partner’s results with US12OF and
            USNG may not be representative of results that may be experienced with
            a fund
            directly investing in futures contracts or other managed funds investing
            in
            futures contracts. For more information on the performance of US12OF
            and USNG,
            see the Performance Tables below.  Since
            USG
            did not commence investment activities nor issue units during the year
            ended
            December 31, 2007, performance information has not been included for
            USG.
  PAST
            PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS
 Experience
            in Raising and Investing in Funds through December 31, 2007
 
 Dollar
                      Amount Offered in US12OF Offering*:
                  
                  $
                  550,000,000Dollar
                      Amount Raised in US12OF Offering:
                  
                  $
                  20,127,316Organizational
                      Expenses in US12OF Offering:SEC
                      registration fee**:
                  
                  $
                  16,885FINRA
                      registration fee**:
                  
                  $
                  75,500AMEX
                      listing fee**:
                  
                  $
                  5,000Auditor’s
                      fees and expenses**:
                  
                  $
                  10,700Legal
                      fees and expenses**:
                  
                  $
                  233,799Printing
                      expenses**:
                  
                  $
                  23,755Length
                      of US12OF offering:
                  
                  Continuous
 
 *
                  Reflects
                      the offering price per unit set forth on the cover page of
                      the
                      registration statement registering such units filed with the
                      SEC.
 **
                  These
                      expenses were paid for by the General Partner.
 
 Dollar
                      Amount Offered in USNG Offering*:
                  
                  $
                  3,664,500,000Dollar
                      Amount Raised in USNG Offering:
                  
                  $
                  1,458,787,976Organizational
                      Expenses in USNG Offering:SEC
                      registration fee**:
                  
                  $
                  104,010FINRA
                      registration fee**:
                  
                  $
                  151,000AMEX
                      listing fee**:
                  
                  $
                  5,000Auditor’s
                      fees and expenses**:
                  
                  $
                  29,000Legal
                      fees and expenses**:
                  
                  $
                  526,746Printing
                      expenses**:
                  
                  $
                  40,323Length
                      of USNG offering:
                  
                  Continuous
 
 *
                  Reflects
                      the offering price per unit set forth on the cover page of
                      the
                      registration statement registering such units filed with the
                      SEC.
 **
                  These
                      expenses were paid for by the General Partner and USNG.
 22
 Compensation
            to the General Partner and Other Compensation
 
 US12OF:
 Expenses
            Paid by US12OF through
            December 31, 2007 in dollar terms (unaudited):
 
 Expense
                  
                  Amount
                      inDollar
                      TermsAmount
                      Paid to General Partner in US12OF Offering:
                  
                  $
                  8,790Amount
                      Paid in Portfolio Brokerage Commissions in US12OF
                      offering:
                  
                  $
                  892Other
                      Amounts Paid in US12OF Offering:
                  
                  $
                  3,479Total
                      Expenses Paid in US12OF Offering:
                  
                  $
                  13,161
 
 Expenses
            Paid by US12OF through
            December 31, 2007 as a Percentage of Average Daily Net Assets
            (unaudited):
 
 Expenses
                      in US12OF Offering:
                  Amount
                      As a Percentage ofAverage
                      Daily Net AssetsGeneral
                      Partner:
                  0.60%
                      annualizedPortfolio
                      Brokerage Commissions:
                  0.06%
                      annualizedOther
                      Amounts Paid in US12OF Offering
                  0.24%
                      annualizedTotal
                      Expense Ratio:
                  0.90%
                      annualized
  US12OF
                        Performance:Name
                        of Commodity
                        Pool:
                    
                    US12OFType
                        of Commodity
                        Pool:
                    
                    Exchange
                        traded
                        securityInception
                        of
                        Trading:
                    
                    December
                        6,
                        2007Aggregate
                        Subscriptions (from
                        inception through December 31, 2007):
                    
                    $
                    20,126,316Total
                        Net Assets as of December
                        31, 2007:
                    
                    $
                    21,691,479Initial
                        NAV Per Unit as of
                        Inception:
                    
                    $
                    50.00NAV
                        per Unit as of December 31,
                        2007:
                    
                    $
                    54.23Worst
                        Monthly Percentage
                        Draw-down:
                    
                    
                    N/AWorst
                        Peak-to-Valley
                        Draw-down:
                    
                    
                    N/A
 USNG:
 Expenses
            Paid by USNG through
            December 31, 2007 in dollar terms (unaudited):
 
 Expense
                  
                  Amount
                      inDollar
                      TermsAmount
                      Paid to General Partner in USNG Offering:
                  
                  $
                  1,239,862Amount
                      Paid in Portfolio Brokerage Commissions in USNG offering:
                  
                  $
                  351,310Other
                      Amounts Paid in USNG Offering:
                  
                  $
                  454,149Total
                      Expenses Paid in USNG Offering:
                  
                  $
                  2,045,321
 
 Expenses
            Paid by USNG through
            December31, 2007 as a Percentage of Average Daily Net Assets
            (unaudited):
 
 Expenses
                      in USNG Offering:
                  Amount
                      As a Percentage ofAverage
                      Daily Net AssetsGeneral
                      Partner:
                  0.60%
                      annualizedPortfolio
                      Brokerage Commissions:
                  0.17%
                      annualizedOther
                      Amounts Paid in USNG Offering
                  0.22%
                      annualizedTotal
                      Expense Ratio:
                  0.99%
                      annualized
  USNG
                          Performance:Name
                          of Commodity
                          Pool:
                      
                      USNGType
                          of Commodity
                          Pool:
                      
                      Exchange
                          traded
                          securityInception
                          of
                          Trading:
                      
                      April
                          18,
                          2007Aggregate
                          Subscriptions (from
                          inception through December 31, 2007):
                      
                      $
                      1,458,786,977Total
                          Net Assets as of December
                          31, 2007:
                      
                      $
                      593,394,981Initial
                          NAV Per Unit as of
                          Inception:
                      
                      $
                      50.00NAV
                          per Unit as of December 31,
                          2007:
                      
                      $
                      36.18Worst
                          Monthly Percentage
                          Draw-down:
                      
                      
                      November
                          2007 (16.16%)Worst
                          Peak-to-Valley
                          Draw-down:
                      
                      
                      April
                          2007 - August 2007 (34.74%)
 23
 COMPOSITE
            PERFORMANCE DATA FOR US12OF
 PAST
            PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS
 
 Month
                  
                  Rates
                      of ReturnFor
                      the Year 2007December*
                  
                  
                  8.46
                  %Annual
                      Rate of Return (through December 31, 2007)
                  
                  
                  8.46
                  %
 *
            Partial
            from December 6, 2007.
 
 COMPOSITE
            PERFORMANCE DATA FOR USNG
 PAST
            PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS
 Month
                  
                  Rates
                      of ReturnFor
                      the Year 2007April*
                  
                  
                  4.30
                  %May
                  
                  
                  (0.84
                  )%June
                  
                  
                  (15.90
                  )%July
                  
                  
                  (9.68
                  )%August
                  
                  
                  (13.37
                  )%September
                  
                  
                  12.28
                  %October
                  
                  
                  12.09
                  %November
                  
                  
                  (16.16
                  )%December
                  
                  
                  0.75
                  %Annual
                      Rate of Return (through December 31, 2007)
                  
                  
                  (27.64
                  )%
 *
            Partial
            from April 17, 2007.
 
 Draw-down:
            Losses experienced over a specified period. Draw-down is measured on
            the basis
            of monthly returns only and does not reflect intra-month figures.
 
 Worst
            Monthly Percentage Draw-down: The largest single month loss sustained
            since
            inception of trading.
 
 Worst
            Peak-to-Valley Draw-down: The largest percentage decline in the NAV per
            unit
            over the history of the fund. This need not be a continuous decline,
            but can be
            a series of positive and negative returns where the negative returns
            are larger
            than the positive returns.  Worst Peak-to-Valley Draw-down represents
            the greatest percentage decline from any month-end NAV per unit that
            occurs
            without such month-end NAV per unit being equaled or exceeded as of a
            subsequent
            month-end. For example, if the NAV per unit declined by $1 in each of
            January
            and February, increased by $1 in March and declined again by $2 in April,
            a
“peak-to-trough drawdown” analysis conducted as of the end of April would
            consider that “drawdown” to be still continuing and to be $3 in amount, whereas
            if the NAV per unit had increased by $2 in March, the January-February
            drawdown
            would have ended as of the end of February at the $2 level.
 
 Nicholas
            Gerber, the president and CEO of the General Partner, ran the Marc Stevens
            Futures Index Fund over 10 years ago. This fund combined commodity futures
            with
            equity stock index futures. It was a very small private offering, which
            had
            under $1 million in assets. The Marc Stevens Futures Index Fund was a
            commodity
            pool and Mr. Gerber was the CPO. Ameristock Corporation is an affiliate
            of the
            General Partner and it is a California-based registered investment advisor
            registered under the Investment Advisers Act of 1940, as amended (the
            "Advisers
            Act") that has been sponsoring and providing portfolio management services
            to
            mutual funds since 1995. Ameristock Corporation is the investment adviser
            to the
            Ameristock Mutual Fund, Inc., a mutual fund registered under the Investment
            Company Act of 1940, as amended (the "1940 Act") that focuses on large
            cap U.S.
            equities that has approximately $425 million in assets as of December
            31, 2007.
Ameristock
            Corporation is also the investment advisor to the Ameristock ETF Trust,
            an
            open-end management investment company registered under the 1940 Act
            that seeks
            investment results that correspond to the performance of U.S. Treasury
            indices
            owned and compiled by Ryan Holdings LLC and Ryan ALM,
            Inc.
 Investments
  The
          General Partner applies substantially all of USOF’s assets toward trading in Oil
          Futures Contracts and Other Oil Interests, Treasuries, cash and/or cash
          equivalents. The General Partner has sole authority to determine the percentage
          of assets that are:
  ·
                held
                    on deposit with the futures commission merchant or other
                    custodian,
 ·
                  used
                      for other investments, and
 ·
                held
                    in bank accounts to pay current obligations and as
                    reserves.
  The
          General Partner deposits substantially all of USOF’s net assets with the futures
          commission merchant or other custodian for trading. When USOF purchases
          an Oil
          Futures Contract and certain exchange traded Other Oil Interests, USOF
          is
          required to deposit with the selling futures commission merchant on behalf
          of
          the exchange a portion of the value of the contract or other interest as
          security to ensure payment for the obligation under oil interests at maturity.
          This deposit is known as “margin.” USOF invests the remainder of its assets
          equal to the difference between the margin deposited and the face value
          of the
          futures contract in Treasuries, cash and/or cash equivalents.
  The
          General Partner believes that all entities that hold or trade USOF’s assets are
          based in the United States and are subject to United States
          regulations.
  Approximately
          5% to 10% of USOF’s assets have normally been committed as margin for Futures
          Contracts. However, from time to time, the percentage of assets committed
          as
          margin may be substantially more, or less, than such range. The General
          Partner
          invests the balance of USOF’s assets not invested in oil interests or held in
          margin as reserves to be available for changes in margin. All interest
          income is
          used for USOF’s benefit.
  The
          futures commission merchant, a government agency or a commodity exchange
          could
          increase margins applicable to USOF to hold trading positions at any time.
          Moreover, margin is merely a security deposit and has no bearing on the
          profit
          or loss potential for any positions taken.
  USOF’s
          assets are held in segregation pursuant to the CEA and CFTC
          regulations.
 24
 The
          Commodity Interest
          Markets
  General
  The
          CEA
          governs the regulation of commodity interest transactions, markets and
          intermediaries. In December 2000, the CEA was amended by the Commodity
          Futures
          Modernization Act of 2000 (the "CFMA"), which substantially revised the
          regulatory framework governing certain commodity interest transactions
          and the
          markets on which they trade. The CEA, as amended by the CFMA, now provides
          for
          varying degrees of regulation of commodity interest transactions depending
          upon
          the variables of the transaction. In general, these variables include (1)
          the
          type of instrument being traded (e.g., contracts for future delivery, options,
          swaps or spot contracts), (2) the type of commodity underlying the instrument
          (distinctions are made between instruments based on agricultural commodities,
          energy and metals commodities and financial commodities), (3) the nature
          of the
          parties to the transaction (retail, eligible contract participant, or eligible
          commercial entity), (4) whether the transaction is entered into on a
          principal-to-principal or intermediated basis, (5) the type of market on
          which
          the transaction occurs, and (6) whether the transaction is subject to clearing
          through a clearing organization. Information regarding commodity interest
          transactions, markets and intermediaries, and their associated regulatory
          environment, is provided below.
  Futures
          Contracts
  A
          futures
          contract such as an Oil Futures Contract is a standardized contract traded
          on,
          or subject to the rules of, an exchange that calls for the future delivery
          of a
          specified quantity and type of a commodity at a specified time and place.
          Futures contracts are traded on a wide variety of commodities, including
          agricultural products, bonds, stock indices, interest rates, currencies,
          energy
          and metals. The size and terms of futures contracts on a particular commodity
          are identical and are not subject to any negotiation, other than with respect
          to
          price and the number of contracts traded between the buyer and
          seller.
  The
          contractual obligations of a buyer or seller may generally be satisfied
          by
          taking or making physical delivery of the underlying of commodity or by
          making
          an offsetting sale or purchase of an identical futures contract on the
          same or
          linked exchange before the designated date of delivery. The difference
          between
          the price at which the futures contract is purchased or sold and the price
          paid
          for the offsetting sale or purchase, after allowance for brokerage commissions,
          constitutes the profit or loss to the trader. Some futures contracts, such
          as
          stock index contracts, settle in cash (reflecting the difference between
          the
          contract purchase/sale price and the contract settlement price) rather
          than by
          delivery of the underlying commodity.
  In
          market
          terminology, a trader who purchases a futures contract is long in the market
          and
          a trader who sells a futures contract is short in the market. Before a
          trader
          closes out his long or short position by an offsetting sale or purchase,
          his
          outstanding contracts are known as open trades or open positions. The aggregate
          amount of open positions held by traders in a particular contract is referred
          to
          as the open interest in such contract.
  Forward
          Contracts
  A
          forward
          contract is a contractual obligation to purchase or sell a specified quantity
          of
          a commodity at or before a specified date in the future at a specified
          price
          and, therefore, is economically similar to a futures contract. Unlike futures
          contracts, however, forward contracts are typically traded in the
          over-the-counter markets and are not standardized contracts. Forward contracts
          for a given commodity are generally available for various amounts and maturities
          and are subject to individual negotiation between the parties involved.
          Moreover, generally there is no direct means of offsetting or closing out
          a
          forward contract by taking an offsetting position as one would a futures
          contract on a U.S. exchange. If a trader desires to close out a forward
          contract
          position, he generally will establish an opposite position in the contract
          but
          will settle and recognize the profit or loss on both positions simultaneously
          on
          the delivery date. Thus, unlike in the futures contract market where a
          trader
          who has offset positions will recognize profit or loss immediately, in
          the
          forward market a trader with a position that has been offset at a profit
          will
          generally not receive such profit until the delivery date, and likewise
          a trader
          with a position that has been offset at a loss will generally not have
          to pay
          money until the delivery date. In recent years, however, the terms of forward
          contracts have become more standardized, and in some instances such contracts
          now provide a right of offset or cash settlement as an alternative to making
          or
          taking delivery of the underlying commodity.
  The
          forward markets provide what has typically been a
          highly liquid market for foreign exchange trading, and in certain cases
          the
          prices quoted for foreign exchange forward contracts may be more favorable
          than
          the prices for foreign exchange futures contracts traded on U.S. exchanges.
          The
          forward markets are largely unregulated. Forward contracts are, in general,
          not
          cleared or guaranteed by a third party. Commercial banks participating
          in
          trading foreign exchange forward contracts often do not require margin
          deposits,
          but rely upon internal credit limitations and their judgments regarding
          the
          creditworthiness of their counterparties. In recent years, however, many
          over-the-counter market participants in foreign exchange trading have begun
          to
          require that their counterparties post margin.  Further,
            as the result of the CFMA, over-the-counter derivative instruments such
            as
            forward contracts and swap agreements (and options on forwards and physical
            commodities) may begin to be traded on lightly-regulated exchanges or
            electronic
            trading platforms that may, but are not required to, provide for clearing
            facilities. Exchanges and electronic trading platforms on which over-the-counter
            instruments may be traded and the regulation and criteria for that trading
            are
            more fully described below under “Futures Exchanges and Clearing Organizations.”
Nonetheless, absent a clearing facility, USOF’s trading in foreign exchange and
            other forward contracts is exposed to the creditworthiness of the counterparties
            on the other side of the trade.
 25
 Options
          on Futures
          Contracts
  Options
          on futures contracts are standardized contracts traded on an exchange.
          An option
          on futures contract gives the buyer of the option the right, but not the
          obligation, to take a position at a specified price (the striking, strike,
          or
          exercise price) in the underlying futures contract or underlying interest.
          The
          buyer of a call option acquires the right, but not the obligation, to purchase
          or take a long position in the underlying interest, and the buyer of a
          put
          option acquires the right, but not the obligation, to sell or take a short
          position in the underlying interest.
  The
          seller, or writer, of an option is obligated to take a position in the
          underlying interest at a specified price opposite to the option buyer if
          the
          option is exercised. Thus, the seller of a call option must stand ready
          to take
          a short position in the underlying interest at the strike price if the
          buyer
          should exercise the option. The seller of a put option, on the other hand,
          must
          stand ready to take a long position in the underlying interest at the strike
          price.
  A
          call
          option is said to be in-the-money if the strike price is below current
          market
          levels and out-of-the-money if the strike price is above current market
          levels.
          Conversely, a put option is said to be in-the-money if the strike price
          is above
          the current market levels and out-of-the-money if the strike price is below
          current market levels.
  Options
          have limited life spans, usually tied to the delivery or settlement date
          of the
          underlying interest. Some options, however, expire significantly in advance
          of
          such date. The purchase price of an option is referred to as its premium,
          which
          consists of its intrinsic value (which is related to the underlying market
          value) plus its time value. As an option nears its expiration date, the
          time
          value shrinks and the market and intrinsic values move into parity. An
          option
          that is out-of-the-money and not offset by the time it expires becomes
          worthless. On certain exchanges, in-the-money options are automatically
          exercised on their expiration date, but on others unexercised options simply
          become worthless after their expiration date.
  Regardless
          of how much the market swings, the most an option buyer can lose is the
          option
          premium. The option buyer deposits his premium with his broker, and the
          money
          goes to the option seller. Option sellers, on the other hand, face risks
          similar
          to participants in the futures markets. For example, since the seller of
          a call
          option is assigned a short futures position if the option is exercised,
          his risk
          is the same as someone who initially sold a futures contract. Because no
          one can
          predict exactly how the market will move, the option seller posts margin
          to
          demonstrate his ability to meet any potential contractual
          obligations.
  Options
            on Forward Contracts or
            Commodities
  Options
              on forward contracts or commodities operate in a manner similar to
              options on
              futures contracts. An option on a forward contract or commodity gives
              the buyer
              of the option the right, but not the obligation, to take a position
              at a
              specified price in the underlying forward contract or commodity. However,
              similar to forward contracts, options on forward contracts or on commodities
              are
              individually negotiated contracts between counterparties and are typically
              traded in the over-the-counter market. Therefore, options on forward
              contracts
              and physical commodities possess many of the same characteristics of
              forward
              contracts with respect to offsetting positions and credit risk that
              are
              described above.
  Swap
              Contracts
  Swap
              transactions generally involve contracts between two parties to exchange
              a
              stream of payments computed by reference to a notional amount and the
              price of
              the asset that is the subject of the swap. Swap contracts are principally
              traded
              off-exchange, although recently, as a result of regulatory changes
              enacted as
              part of the CFMA, certain swap contracts are now being traded in electronic
              trading facilities and cleared through clearing organizations.
  Swaps
              are
              usually entered into on a net basis, that is, the two payment streams
              are netted
              out in a cash settlement on the payment date or dates specified in
              the
              agreement, with the parties receiving or paying, as the case may be,
              only the
              net amount of the two payments. Swaps do not generally involve the
              delivery of
              underlying assets or principal. Accordingly, the risk of loss with
              respect to
              swaps is generally limited to the net amount of payments that the party
              is
              contractually obligated to make. In some swap transactions one or both
              parties
              may require collateral deposits from the counterparty to support that
              counterparty’s obligation under the swap agreement. If the counterparty to such
              a swap defaults, the risk of loss consists of the net amount of payments
              that
              the party is contractually entitled to receive less any collateral deposits
              it is holding.
  Participants
  The
              two
              broad classes of persons who trade commodities are hedgors and speculators.
              Hedgors include financial institutions that manage or deal in interest
              rate-sensitive instruments, foreign currencies or stock portfolios,
              and
              commercial market participants, such as farmers and manufacturers,
              that market
              or process commodities. Hedging is a protective procedure designed
              to lock in
              profits that could otherwise be lost due to an adverse movement in
              the
              underlying commodity, for example, the adverse price movement between
              the time a
              merchandiser or processor enters into a contract to buy or sell a raw
              or
              processed commodity at a certain price and the time he must perform
              the
              contract. In such a case, at the time the hedgor contracts to physically
              sell
              the commodity at a future date he will simultaneously buy a futures
              or forward
              contract for the necessary equivalent quantity of the commodity. At
              the time for
              performance of the contract, the hedgor may accept delivery under his
              futures
              contract and sell the commodity quantity as required by his physical
              contract or
              he may buy the actual commodity, sell if under the physical contract
              and close
              out his position by making an offsetting sale of a futures
              contract.
 26
 The
                commodity interest markets enable the hedgor to shift the risk of
                price
                fluctuations. The usual objective of the hedgor is to protect the
                profit that he
                expects to earn from farming, merchandising, or processing operations
                rather
                than to profit from his trading. However, at times the impetus for
                a hedge
                transaction may result in part from speculative objectives.
  Unlike
                the hedgor, the speculator generally expects neither to make nor
                take delivery
                of the underlying commodity. Instead, the speculator risks his capital
                with the
                hope of making profits from price fluctuations in the commodities.
                The
                speculator is, in effect, the risk bearer who assumes the risks that
                the hedgor
                seeks to avoid. Speculators rarely make or take delivery of the underlying
                commodity; rather they attempt to close out their positions prior
                to the
                delivery date. Because the speculator may take either a long or short
                position
                in commodities, it is possible for him to make profits or incur losses
                regardless of whether prices go up or down.
  Futures
              Exchanges and Clearing
              Organizations
  Futures
              exchanges provide centralized market facilities in which multiple persons
              have
              the ability to execute or trade contracts by accepting bids and offers
              from
              multiple participants. Futures exchanges may provide for execution
              of trades at
              a physical location utilizing trading pits and/or may provide for trading
              to be
              done electronically through computerized matching of bids and offers
              pursuant to
              various algorithms. Members of a particular exchange and the trades
              executed on
              such exchanges are subject to the rules of that exchange. Futures exchanges
              and
              clearing organizations are given reasonable latitude in promulgating
              rules and
              regulations to control and regulate their members. Examples of regulations
              by
              exchanges and clearing organizations include the establishment of initial
              margin
              levels, rules regarding trading practices, contract specifications,
              speculative
              position limits, daily price fluctuation limits, and execution and
              clearing
              fees.
  Clearing
              organizations provide services designed to mutualize or transfer the
              credit risk
              arising from the trading of contracts on an exchange or other electronic
              trading
              facility. Once trades made between members of an exchange or electronic
              trading
              facility have been confirmed, the clearing organization becomes substituted
              for
              the clearing member acting on behalf of each buyer and each seller
              of contracts
              traded on the exchange or trading platform and in effect becomes the
              other party
              to the trade. Thereafter, each clearing member party to the trade looks
              only to
              the clearing
              organization for performance. The clearing organization generally establishes
              some sort of security or guarantee fund to which all clearing members
              of the
              exchange must contribute; this fund acts as an emergency buffer that
              is intended
              to enable the clearing organization to meet its obligations with regard
              to the
              other side of an insolvent clearing member’s contracts. Furthermore, the
              clearing organization requires margin deposits and continuously marks
              positions
              to market to provide some assurance that its members will be able to
              fulfill
              their contractual obligations. Thus, a central function of the clearing
              organization is to ensure the integrity of trades, and members effecting
              transactions on an exchange need not concern themselves with the solvency
              of the
              party on the opposite side of the trade; their only remaining concerns
              are the
              respective solvencies of their own customers, their clearing broker
              and the
              clearing organization. The clearing organizations do not deal with
              customers,
              but only with their member firms and the guarantee of performance for
              open
              positions provided by the clearing organization does not run to
              customers.
  U.S.
              Futures
              Exchanges
  Futures
              exchanges in the United States are subject to varying degrees of regulation
              by
              the CFTC based on their designation as one of the following: a designated
              contract market, a derivatives transaction execution facility, an exempt
              board
              of trade or an electronic trading facility.
  A
              designated contract market is the most highly regulated level of futures
              exchange. Designated contract markets may offer products to retail
              customers on
              an unrestricted basis. To be designated as a contract market, the exchange
              must
              demonstrate that it satisfies specified general criteria for designation,
              such
              as having the ability to prevent market manipulation, rules and procedures
              to
              ensure fair and equitable trading, position limits, dispute resolution
              procedures, minimization of conflicts of interest and protection of
              market
              participants. Among the principal designated contract markets in the
              United
              States are the Chicago Board of Trade, the Chicago Mercantile Exchange
              and the
              NYMEX. Each of the designated contract markets in the United States
              must provide
              for the clearance and settlement of transactions with a CFTC-registered
              derivatives clearing organization.
 27
 A
              derivatives transaction execution facility (a "DTEF"), is a new type
              of exchange
              that is subject to fewer regulatory requirements than a designated
              contract
              market but is subject to both commodity interest and participant limitations.
              DTEFs limit access to eligible traders that qualify as either eligible
              contract
              participants or eligible commercial entities for futures and option
              contracts on
              commodities that have a nearly inexhaustible deliverable supply, are
              highly
              unlikely to be susceptible to the threat of manipulation, or have no
              cash
              market, security futures products, and futures and option contracts
              on
              commodities that the CFTC may determine, on a case-by-case basis, are
              highly
              unlikely to be susceptible to the threat of manipulation. In addition,
              certain
              commodity interests excluded or exempt from the CEA, such as swaps,
              etc. may be
              traded on a DTEF. There is no requirement that a DTEF use a clearing
              organization, except with respect to trading in security futures contracts,
              in
              which case the clearing organization must be a securities clearing
              agency.
              However, if futures contracts and options on futures contracts on a
              DTEF are
              cleared, then it must be through a CFTC-registered derivatives clearing
              organization, except that some excluded or exempt commodities traded
              on a DTEF
              may be cleared through a clearing organization other than one registered
              with
              the CFTC.
  An
              exempt
              board of trade is also a newly designated form of exchange. An exempt
              board of
              trade is substantially unregulated, subject only to CFTC anti-fraud
              and
              anti-manipulation authority. An exempt board of trade is permitted
              to trade
              futures contracts and options on futures contracts provided that the
              underlying
              commodity is not a security or securities index and has an inexhaustible
              deliverable supply or no cash market. All traders on an exempt board
              of trade
              must qualify as eligible contract participants. Contracts deemed eligible
              to be
              traded on an exempt board of trade include contracts on interest rates,
              exchange
              rates, currencies, credit risks or measures, debt instruments, measures
              of
              inflation, or other macroeconomic indices or measures. There is no
              requirement
              that an exempt board of trade use a clearing organization. However,
              if contracts
              on an exempt board of trade are cleared, then it must be through a
              CFTC-registered derivatives clearing organization. A board of trade
              electing to
              operate as an exempt board of trade must file a written notification
              with the
              CFTC.
  An
              electronic trading facility is a new form of exchange that operates
              by means of
              an electronic or telecommunications network and maintains an automated
              audit
              trail of bids, offers, and the matching of orders or the execution
              of
              transactions on the electronic trading facility. The CEA does not apply
              to, and
              the CFTC has no jurisdiction over, transactions on an electronic trading
              facility in certain excluded commodities that are entered into between
              principals that qualify as eligible contract participants, subject
              only to CFTC
              anti-fraud and anti- manipulation
              authority. In general, excluded commodities include interest rates,
              currencies,
              securities, securities indices or other financial, economic or commercial
              indices or measures.
  The
              General Partner intends to monitor the development of and opportunities
              and
              risks presented by the new less-regulated exchanges and exempt boards
              and may,
              in the future, allocate a percentage of USOF’s assets to trading in products on
              these exchanges. Provided USOF maintains assets exceeding $5 million,
              USOF would
              qualify as an eligible contract participant and thus would be able
              to trade on
              such exchanges.
  Non-U.S.
              Futures
              Exchanges
  Non-U.S.
              futures exchanges differ in certain respects from their U.S. counterparts.
              Importantly, non-U.S. futures exchanges are not subject to regulation
              by the
              CFTC, but rather are regulated by their home country regulator. In
              contrast to
              U.S. designated contract markets, some non-U.S. exchanges are principals’
markets, where trades remain the liability of the traders involved,
              and the
              exchange or an affiliated clearing organization, if any, does not become
              substituted for any party. Due to the absence of a clearing system,
              such
              exchanges are significantly more susceptible to disruptions. Further,
              participants in such markets must often satisfy themselves as to the
              individual
              creditworthiness of each entity with which they enter into a trade.
              Trading on
              non-U.S. exchanges is often in the currency of the exchange’s home jurisdiction.
              Consequently, USOF is subject to the additional risk of fluctuations
              in the
              exchange rate between such currencies and U.S. dollars and the possibility
              that
              exchange controls could be imposed in the future. Trading on non-U.S.
              exchanges
              may differ from trading on U.S. exchanges in a variety of ways and,
              accordingly,
              may subject USOF to additional risks.
 28
 Accountability
              Levels and Position
              Limits
  The
              CFTC
              and U.S. designated contract markets have established accountability
              levels and
              position limits on the maximum net long or net short futures contracts in
              commodity interests that any person or group of persons under common
              trading control (other than a hedgor, which USOF is not) may hold,
              own or
              control. Among the purposes of accountability levels and position limits
              is to
              prevent a corner or squeeze on a market or undue influence on prices
              by any
              single trader or group of traders. The position limits currently established
              by
              the CFTC apply to certain agricultural commodity interests, such as
              grains
              (oats, barley, and flaxseed), soybeans, corn, wheat, cotton, eggs,
              rye, and
              potatoes, but not to interests in energy products. In addition, U.S.
              exchanges
              may set accountability levels and position limits for all commodity
              interests
              traded on that exchange. For example, the current accountability level
              for
              investments at any one time in Oil Futures Contracts (including investments
              in
              the Benchmark Oil Futures Contract) on the NYMEX is 20,000 contracts.
              The NYMEX
              also imposes position limits on contracts held in the last few days
              of trading
              in the near month contract to expire. Certain exchanges or clearing
              organizations also set limits on the total net positions that may be
              held by a
              clearing broker. In general, no position limits are in effect in forward
              or
              other over-the-counter contract trading or in trading on non-U.S. futures
              exchanges, although the principals with which USOF and the clearing
              brokers may
              trade in such markets may impose such limits as a matter of credit
              policy. For
              purposes of determining accountability levels and position limits USOF’s
              commodity interest positions will not be attributable to investors
              in their own
              commodity interest trading.
  Daily
              Price
              Limits
  Most
              U.S.
              futures exchanges (but generally not non-U.S. exchanges) may limit
              the amount of
              fluctuation in some futures contract or options on a futures contract
              prices
              during a single trading day by regulations. These regulations specify
              what are
              referred to as daily price fluctuation limits or more commonly, daily
              limits.
              The daily limits establish the maximum amount that the price of a futures
              or
              options on futures contract may vary either up or down from the previous
              day’s
              settlement price. Once the daily limit has been reached in a particular
              futures
              or options on futures contract, no trades may be made at a price beyond
              the
              limit. Positions in the futures or options contract may then be taken
              or
              liquidated, if at all, only at inordinate expense or if traders are
              willing to
              effect trades at or within the limit during the period for trading
              on such day.
              Because the daily limit rule governs price movement only for a particular
              trading day, it does not limit losses and may in fact substantially
              increase
              losses because it may prevent the liquidation of unfavorable positions.
              Futures
              contract prices have occasionally moved to the daily limit for several
              consecutive trading days, thus preventing prompt liquidation of positions
              and
              subjecting the trader to substantial losses for those days. The concept
              of daily
              price limits is not relevant to over-the-counter contracts, including
              forwards
              and swaps, and thus such limits are not imposed by banks and others
              who deal in
              those markets.
  In
              contrast, the NYMEX does not impose daily limits but rather limits
              the amount of
              price fluctuation for Oil Futures Contracts. For example, the NYMEX
              imposes a
              $10.00 per barrel ($10,000 per contract) price fluctuation limit for the
              Benchmark Oil Futures Contract. This limit is initially based off the
              previous trading day’s settlement price. If any Benchmark Oil Futures Contract
              is traded, bid, or offered at the limit for five minutes, trading is
              halted for
              five minutes. When trading resumes it begins at the point where the
              limit was
              imposed and the limit is reset to be $10.00 per barrel in either direction
              of
              that point. If another halt were triggered, the market would continue
              to be
              expanded by $10.00 per barrel in either direction after each successive
              five-minute trading halt. There is no maximum price fluctuation limits
              during
              any one trading session.
  Commodity
              Prices
  Commodity
              prices are volatile and, although ultimately determined by the interaction
              of
              supply and demand, are subject to many other influences, including
              the
              psychology of the marketplace and speculative assessments of future
              world and
              economic events. Political climate, interest rates, treaties, balance
              of
              payments, exchange controls and other governmental interventions as
              well as
              numerous other variables affect the commodity markets, and even with
              comparatively complete information it is impossible for any trader
              to predict
              reliably commodity prices.
 29
 Regulation
  Futures
              exchanges in the United States are subject to varying degrees of regulation
              under the CEA depending on whether such exchange is a designated contract
              market, DTEF, exempt board of trade or electronic trading facility.
              Derivatives
              clearing organizations are also subject to the CEA and CFTC regulation.
              The CFTC
              is the governmental agency charged with responsibility for regulation
              of futures
              exchanges and commodity interest trading conducted on those exchanges.
              The
              CFTC’s function is to implement the CEA’s objectives of preventing price
              manipulation and excessive speculation and promoting orderly and efficient
              commodity interest markets. In addition, the various exchanges and
              clearing
              organizations themselves exercise regulatory and supervisory authority
              over
              their member firms.
  The
              CFTC
              possesses exclusive jurisdiction to regulate the activities of CPOs
              and
              commodity trading advisors and has adopted regulations with respect
              to the
              activities of those persons and/or entities. Under the CEA, a registered
              CPO,
              such as the General Partner, is required to make annual filings with
              the CFTC
              describing its organization, capital structure, management and controlling
              persons. In addition, the CEA authorizes the CFTC to require and review
              books
              and records of, and documents prepared by, registered CPOs. Pursuant
              to this
              authority, the CFTC requires CPOs to keep accurate, current and orderly
              records
              for each pool that they operate. The CFTC may suspend the registration
              of a CPO
              (1) if the CFTC finds that the operator’s trading practices tend to disrupt
              orderly market conditions, (2) if any controlling person of the operator
              is
              subject to an order of the CFTC denying such person trading privileges
              on any
              exchange, and (3) in certain other circumstances. Suspension, restriction
              or
              termination of the General Partner’s registration as a CPO would prevent it,
              until that registration were to be reinstated, from managing USOF,
              and might
              result in the termination of USOF. USOF itself is not required to be
              registered
              with the CFTC in any capacity.
  The
              CEA
              gives the CFTC similar authority with respect to the activities of
              commodity
              trading advisors. If a trading advisor’s commodity trading advisor registration
              were to be terminated, restricted or suspended, the trading advisor
              would be
              unable, until the registration were to be reinstated, to render trading
              advice
              to USOF.
  The
              CEA
              requires all futures commission merchants, such as USOF’s clearing brokers, to
              meet and maintain specified fitness and financial requirements, to
              segregate
              customer funds from proprietary funds and account separately for all
              customers’
funds and positions, and to maintain specified books and records open
              to
              inspection by the staff of the CFTC. The CFTC has similar authority
              over
              introducing brokers, or persons who solicit or accept orders for commodity
              interest trades but who do not accept margin deposits for the execution
              of
              trades. The CEA authorizes the CFTC to regulate trading by futures
              commission
              merchants and by their officers and directors, permits the CFTC to
              require
              action by exchanges in the event of market emergencies, and establishes
              an
              administrative procedure under which customers may institute complaints
              for
              damages arising from alleged violations of the CEA. The CEA also gives
              the
              states powers to enforce its provisions and the regulations of the
              CFTC.
  USOF’s
              investors are afforded prescribed rights for reparations under the
              CEA.
              Investors may also be able to maintain a private right of action for
              violations
              of the CEA. The CFTC has adopted rules implementing the reparation
              provisions of
              the CEA, which provide that any person may file a complaint for a reparations
              award with the
              CFTC
              for violation of the CEA against a floor broker or a futures commission
              merchant, introducing broker, commodity trading advisor, commodity
              pool
              operator, and their respective associated persons.
  Pursuant
              to authority in the CEA, the NFA has been formed and registered with
              the CFTC as
              a registered futures association. At the present time, the NFA is the
              only
              self-regulatory organization for commodity interest professionals,
              other than
              futures exchanges. The CFTC has delegated to the NFA responsibility
              for the
              registration of commodity trading advisors, commodity pool operators,
              futures
              commission merchants, introducing brokers, and their respective associated
              persons and floor brokers. The General Partner, each trading advisor,
              the
              selling agents and the clearing brokers are members of the NFA. As
              such, they
              are subject to NFA standards relating to fair trade practices, financial
              condition and consumer protection. USOF itself is not required to become
              a
              member of the NFA. As the self-regulatory body of the commodity interest
              industry, the NFA promulgates rules governing the conduct of professionals
              and
              disciplines those professionals that do not comply with these rules.
              The NFA
              also arbitrates disputes between members and their customers and conducts
              registration and fitness screening of applicants for membership and
              audits of
              its existing members.
 30
 The
              regulations of the CFTC and the NFA prohibit any representation by
              a person
              registered with the CFTC or by any member of the NFA, that registration
              with the
              CFTC, or membership in the NFA, in any respect indicates that the CFTC
              or the
              NFA, as the case may be, has approved or endorsed that person or that
              person’s
              trading program or objectives. The registrations and memberships of
              the parties
              described in this summary must not be considered as constituting any
              such
              approval or endorsement. Likewise, no futures exchange has given or
              will give
              any similar approval or endorsement.
  The
              regulation of commodity interest trading in the United States and other
              countries is an evolving area of the law. The various statements made
              in this
              summary are subject to modification by legislative action and changes
              in the
              rules and regulations of the CFTC, the NFA, the futures exchanges,
              clearing
              organizations and other regulatory bodies.
  The
              function of the CFTC is to implement the objectives of the CEA of preventing
              price manipulation and other disruptions to market integrity, avoiding
              systemic
              risk, preventing fraud and promoting innovation, competition and financial
              integrity of transactions. As mentioned above, this regulation, among
              other
              things, provides that the trading of commodity interest contracts generally
              must
              be upon exchanges designated as contract markets or DTEFs and that
              all trading
              on those exchanges must be done by or through exchange members. Under
              the CFMA,
              commodity interest trading in some commodities between sophisticated
              persons may
              be traded on a trading facility not regulated by the CFTC. As a general
              matter,
              trading in spot contracts, forward contracts, options on forward contracts
              or
              commodities, or swap contracts between eligible contract participants
              is not
              within the jurisdiction of the CFTC and may therefore be effectively
              unregulated. The trading advisors may engage in those transactions
              on behalf of
              USOF in reliance on this exclusion from regulation.
  In
              general, the CFTC does not regulate the interbank and forward foreign
              currency
              markets with respect to transactions in contracts between certain sophisticated
              counterparties such as USOF or between certain regulated institutions
              and retail
              investors. Although U.S. banks are regulated in various ways by the
              Federal
              Reserve Board, the Comptroller of the Currency and other U.S. federal
              and state
              banking officials, banking authorities do not regulate the forward
              markets.
  While
              the
              U.S. government does not currently impose any restrictions on the movements
              of
              currencies, it could choose to do so. The imposition or relaxation
              of exchange
              controls in various jurisdictions could significantly affect the market
              for that
              and other jurisdictions’ currencies. Trading in the interbank market also
              exposes USOF to a risk of default since failure of a bank with which
              USOF had
              entered into a forward contract would likely result in a default and
              thus
              possibly substantial losses to USOF.
  The
              CFTC
              is prohibited by statute from regulating trading on non-U.S. futures
              exchanges
              and markets. The CFTC, however, has adopted regulations relating to
              the
              marketing of non-U.S. futures contracts in the United States. These
              regulations
              permit certain contracts traded on non-U.S. exchanges to be offered
              and sold in
              the United States.
  Commodity
              Margin
  Original
              or initial margin is the minimum amount of funds that must be deposited
              by a
              commodity interest trader with the trader’s broker to initiate and maintain an
              open position in futures contracts. Maintenance margin is the amount
              (generally
              less than the original margin) to which a trader’s account may decline before he
              must deliver additional margin. A margin deposit
              is like a
              cash performance bond. It helps assure the trader’s performance of the futures
              contracts that he or she purchases or sells. Futures contracts are
              customarily
              bought and sold on initial margin that represents a very small percentage
              (ranging upward from less than 2%) of the aggregate purchase or sales
              price of
              the contract. Because of such low margin requirements, price fluctuations
              occurring in the futures markets may create profits and losses that,
              in relation
              to the amount invested, are greater than are customary in other forms
              of
              investment or speculation. As discussed below, adverse price changes
              in the
              futures contract may result in margin requirements that greatly exceed
              the
              initial margin. In addition, the amount of margin required in connection
              with a
              particular futures contract is set from time to time by the exchange
              on which
              the contract is traded and may be modified from time to time by the
              exchange
              during the term of the contract.
 31
 Brokerage
              firms, such as USOF’s clearing brokers, carrying accounts for traders in
              commodity interest contracts may not accept lower, and generally require
              higher,
              amounts of margin as a matter of policy to further protect themselves.
              The
              clearing brokers require USOF to make margin deposits equal to exchange
              minimum
              levels for all commodity interest contracts. This requirement may be
              altered
              from time to time in the clearing brokers’ discretion.
  Trading
              in the over-the-counter markets where no clearing facility is provided
              generally
              does not require margin but generally does require the extension of
              credit
              between counterparties.
  When
              a
              trader purchases an option, there is no margin requirement; however,
              the option
              premium must be paid in full. When a trader sells an option, on the
              other hand,
              he or she is required to deposit margin in an amount determined by
              the margin
              requirements established for the underlying interest and, in addition,
              an amount
              substantially equal to the current premium for the option. The margin
              requirements imposed on the selling of options, although adjusted to
              reflect the
              probability that out-of-the-money options will not be exercised, can
              in fact be
              higher than those imposed in dealing in the futures markets directly.
              Complicated margin requirements apply to spreads and conversions, which
              are
              complex trading strategies in which a trader acquires a mixture of
              options
              positions and positions in the underlying interest.
  Margin
              requirements are computed each day by a trader’s clearing broker. When the
              market value of a particular open commodity interest position changes
              to a point
              where the margin on deposit does not satisfy maintenance margin requirements,
              a
              margin call is made by the broker. If the margin call is not met within
              a
              reasonable time, the broker may close out the trader’s position. With respect to
              USOF’s trading, USOF (and not its investors personally) is subject to margin
              calls.
  Finally,
              many major U.S. exchanges have passed certain cross margining arrangements
              involving procedures pursuant to which the futures and options positions
              held in
              an account would, in the case of some accounts, be aggregated and margin
              requirements would be assessed on a portfolio basis, measuring the
              total risk of
              the combined positions.
  SEC
                Reports
  USOF
                makes available, free of charge, on its website, its Annual Reports
                on Form
                10-K, its Quarterly Reports on Form 10-Q, its Current Reports on
                Form 8-K and
                amendments to these reports filed or furnished pursuant to Section
                13(a) or
                15(d) of the Exchange Act as soon as reasonably practicable after
                these forms
                are filed with, or furnished to, the SEC.
 32
 Item 1A.
                        Risk
                            Factors.
 The
                    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 USOF’s condensed financial
                    statements and the related notes.
  Risks
                Associated With Owning Direct
                or Indirect Interests in Oil
  Investing
                in oil interests subjects
                USOF to the risks of the crude oil industry and this could result
                in large
                fluctuations in the price of USOF’s units.
  USOF
                is
                subject to the risks and hazards of the crude oil industry because
                it invests in
                oil interests. The risks and hazards that are inherent in the oil
                industry may
                cause the price of oil to widely fluctuate. If USOF’s units accurately track the
                spot price of light, sweet crude oil, then the price of its units may also
                fluctuate.
  The
                risks
                of crude oil drilling and production activities include the
                following:
  ·
                      no
                          commercially productive crude oil or natural gas reservoirs
                          may be
                          found;
 ·
                      crude
                          oil and natural gas drilling and production activities
                          may be shortened,
                          delayed or canceled;
 ·
                      the
                          ability of an oil producer to develop, produce and market
                          reserves may be
                          limited by:
 ·  title
                problems,
 · political
                conflicts, including war,
 · weather
                conditions,
 ·  compliance
                with governmental requirements,
 ·  refinery
                capacity, and
 · mechanical
                difficulties or shortages or delays in the delivery of drilling rigs
                and other
                equipment;
 ·
                      decisions
                          of the cartel of oil producing countries (e.g.,
                          OPEC), to produce more or less oil;
 ·
                      increases
                          in oil production due to price rises may make it more economical
                          to
                          extract oil from additional sources and may later temper
                          further oil price
                          increases; and
 ·
                      economic
                          activity of users, as certain economies’ expand, oil consumption increases
                          (e.g.,
                          China, India) and as economies contract (in a recession
                          or depression),
                          oil demand and prices fall.
  The
                crude
                oil industry experiences numerous operating risks. These operating
                risks include
                the risk of fire, explosions, blow-outs, pipe failure, abnormally
                pressured
                formations and environmental hazards. Environmental hazards include
                oil spills,
                natural gas leaks, ruptures and discharges of toxic gases.
 33
 Crude
                oil
                operations also are subject to various U.S. federal, state and local
                regulations
                that materially affect operations. Matters regulated include discharge
                permits
                for drilling operations, drilling and abandonment bonds, reports
                concerning
                operations, the spacing of wells and pooling of properties and taxation.
                At
                various times, regulatory agencies have imposed price controls and
                limitations
                on production. In order to conserve supplies of crude oil and natural
                gas, these
                agencies have restricted the rates of flow of crude oil and natural
                gas wells
                below actual production capacity. Federal, state, and local laws
                regulate
                production, handling, storage, transportation and disposal of crude
                oil and
                natural gas, by-products from crude oil and natural gas and other
                substances and
                materials produced or used in connection with crude oil and natural
                gas
                operations.
  The
                price of USOF’s units may be
                influenced by factors such as the short-term supply and demand for
                oil and the
                short-term supply and demand for USOF’s units. This may cause the units to trade
                at a price that is above or below USOF’s NAV per unit. Accordingly, changes in
                the price of units may substantially vary from the changes in the
                spot price
                of light, sweet crude oil. If this variation occurs, then investors
                may not
                be able to effectively use USOF as a way to hedge against oil-related
                losses or
                as a way to indirectly invest in oil.
  While
                it
                is expected that the trading prices of units will fluctuate in accordance
                with
                changes in USOF’s NAV, the prices of units may also be influenced by other
                factors, including the short-term supply and demand for oil and the
                units. There
                is no guarantee that the units will not trade at appreciable discounts
                from,
                and/or premiums to, USOF’s NAV. This could cause changes in the price of units
                to substantially vary from changes in the spot price of light, sweet crude
                oil. This may be harmful to investors because if changes in the price
                of units
                vary substantially from changes in the spot price of light, sweet crude
                oil, then investors may not be able to effectively use USOF as a
                way to hedge
                the risk of losses in their oil-related transactions or as a way
                to indirectly
                invest in oil.
  Changes
                in USOF’s NAV may not
                correlate with changes in the price of the Benchmark Oil Futures
                Contract. If
                this were to occur, investors may not be able to effectively use USOF as a
                way to hedge against oil-related losses or as a way to indirectly
                invest in
                oil.
  The
                General Partner endeavors to invest USOF’s assets as fully as possible in
                short-term Oil Futures Contracts and Other Oil Interests so that
                the changes in
                NAV closely correlate with the changes in the price of the Benchmark
                Oil Futures
                Contract. However, changes in USOF’s NAV may not correlate with the changes in
                the price of the Benchmark Oil Futures Contract for several reasons
                as set forth
                below:
  ·
                      USOF
                          (i) may not be able to buy/sell the exact amount of Oil
                          Futures Contracts
                          and Other Oil Interests to have a perfect correlation with
                          NAV; (ii) may
                          not always be able to buy and sell Oil Futures Contracts
                          or Other Oil
                          Interests at the market price; (iii) may not experience
                          a perfect
                          correlation between the spot price of light, sweet crude oil and the
                          underlying investments in Oil Futures Contracts and Other
                          Oil Interests
                          and Treasuries, cash and/or cash equivalents; and (iv)
                          is required to pay
                          brokerage fees and  the management fee, which will have an effect on
                          the correlation.
  ·
                      Short-term
                          supply and demand for light, sweet crude oil may cause the market
                          price of the changes in the Benchmark Oil Futures Contract
                          to vary from
                          changes in USOF’s NAV if USOF has fully invested in Oil Futures Contracts
                          that do not reflect such supply and demand and it is unable
                          to replace
                          such contracts with Oil Futures Contracts that do reflect
                          such supply and
                          demand. In addition, there are also technical differences
                          between the two
                          markets, e.g., one is a physical market while the other
                          is a futures
                          market traded on exchanges, that may cause variations between
                          the spot
                          price of crude oil and the prices of related futures
                          contracts.
  ·
                      USOF
                          plans to buy only as many Oil Futures Contracts and Other
                          Oil Interests
                          that it can to get the changes in the NAV as close as possible
                          to the
                          price of the changes in Benchmark Oil Futures Contract.
                          The remainder of
                          its assets will be invested in Treasuries, cash and/or
                          cash equivalents
                          and will be used to satisfy initial margin and additional
                          margin
                          requirements, if any, and to otherwise support its investments
                          in oil
                          interests. Investments in Treasuries, cash and/or cash
                          equivalents, both
                          directly and as margin, will provide rates of return that
                          will vary from
                          changes in the value of the spot price of light, sweet crude oil and
                          the price of the Benchmark Oil Futures
                          Contract.
 34
 ·
                      In
                          addition, because USOF incurs certain expenses in connection
                          with its
                          investment activities, and holds most of its assets in
                          more liquid
      short-term securities for margin and other liquidity
                          purposes and for
                          redemptions that may be necessary on an ongoing basis,
                          the General Partner
                          is generally not able to fully invest USOF’s assets in Oil Futures
                          Contracts or Other Oil Interests and there cannot be perfect
                          correlation
                          between changes in USOF’s NAV and the changes in the price of the
                          Benchmark Oil Futures Contract.
  ·
                      As
                          USOF grows, there may be more or less correlation. For
                          example, if USOF
                          only has enough money to buy three Benchmark Oil Futures
                          Contracts and it
                          needs to buy four contracts to track the price of oil then
                          the correlation
                          will be lower, but if it buys 20,000 Benchmark Oil Futures
                          Contracts and
                          it needs to buy 20,001 contracts then the correlation will
                          be higher. At
                          certain asset levels, USOF may be limited in its ability
                          to purchase the
                          Benchmark Oil Futures Contract or other Oil Futures Contracts
                          due to
                          accountability levels imposed by the relevant exchanges.
                          To the extent
                          that USOF invests in these other Oil Futures Contracts
                          or Other Oil
                          Interests, the correlation with the Benchmark Oil Futures
                          Contracts may be
                          lower. If USOF is required to invest in other Oil Futures
                          Contracts and
                          Other Oil Interests that are less correlatedwith the Benchmark Oil Futures Contract, USOF would likely
                          invest in
                          over-the-counter contracts to increase the level of correlation
                          of USOF’s
                          assets. Over-the-counter contracts entail certain risks
                          described below
                          under “Over-the-Counter Contract
                          Risk.”
  ·
                      USOF
                          may not be able to buy the exact number of Oil Futures
                          Contracts and Other
                          Oil Interests to have a perfect correlation with the Benchmark
                          Oil Futures
                          Contract if the purchase price of Oil Futures Contracts
                          required to be
                          fully invested in such contracts is higher than the proceeds
                          received for
                          the sale of a Creation Basket on the day the basket was
                          sold. In such
                          case, USOF could not invest the entire proceeds from the
                          purchase of the
                          Creation Basket in such futures contracts (for example,
                          assume USOF
                          receives $6,679,000 for the sale of a Creation Basket and
                          assume that the
                          price of an Oil Futures Contract for light, sweet crude oil is
                          $66,800, then USOF could only invest in only 99 Oil Futures
                          Contracts with
                          an aggregate value of $6,613,200). USOF would be required
                          to invest a
                          percentage of the proceeds in Treasuries to be deposited
                          as margin with
                          the futures commission merchant through which the contract
                          was purchased.
                          The remainder of the purchase price for the Creation Basket
                          would remain
                          invested in cash and Treasuries as determined by the General
                          Partner from
                          time to time based on factors such as potential calls for
                          margin or
                          anticipated redemptions. If the trading market for Oil
                          Futures Contracts
                          is suspended or closed, USOF may not be able to purchase
                          these investments
                          at the last reported price for such
                          investments.
  If
                changes in USOF’s NAV do not correlate with changes in the price of the
                Benchmark Oil Futures Contract, then  investing
                in USOF may not be an effective way to hedge against oil-related
                losses or
                indirectly invest in oil.
  The
                  Benchmark Oil Futures Contract
                  may not correlate with the spot price of light, sweet, crude oil and this
                  could cause the price of units to substantially vary from the changes
                  in the
                  spot price of light, sweet crude oil. If this were to occur, then
                  investors may
                  not be able to effectively use USOF as a way to hedge against crude
                  oil-related
                  losses or as a way to indirectly invest in crude oil.
  When
                  using the Benchmark Oil Futures Contract as a strategy to track
                  the spot price
                  of light, sweet crude oil, at best the correlation between changes
                  in
                  prices of such oil interests and the spot price of crude oil can be only
                  approximate. The degree of imperfection of correlation depends
                  upon
                  circumstances such as variations in the speculative oil market,
                  supply of and
                  demand for such oil interests and technical influences in oil futures
                  trading.
                  If there is a weak correlation between the oil interests and the
                  spot price
                  of light, sweet, crude oil, then the price of units may not accurately
                  track the spot price of light, sweet crude oil and investors may not be
                  able to effectively use USOF as a way to hedge the risk of losses
                  in their
                  oil-related transactions or as a way to indirectly invest in oil.
  USOF
                  may experience a loss if it is
                  required to sell Treasuries at a price lower than the price at
                  which they were
                  acquired.
  The
                  value
                  of Treasuries generally moves inversely with movements in interest
                  rates. If
                  USOF is required to sell Treasuries at a price lower than the price
                  at which
                  they were acquired, USOF will experience a loss. This loss may
                  adversely impact
                  the price of the units and may decrease the correlation between
                  the price of the
                  units, the price of USOF’s Oil Futures Contracts and Other Oil Interests, and
                  the spot price of light, sweet crude oil.
 35
 Certain
                  of USOF’s investments could
                  be illiquid which could cause large losses to investors at any
                  time or from time
                  to time.
  USOF
                  may
                  not always be able to liquidate its positions in its investments
                  at the desired
                  price. It is difficult to execute a trade at a specific price when
                  there is a
                  relatively small volume of buy and sell orders in a market. A market
                  disruption,
                  such as a foreign government taking political actions that disrupt
                  the market in
                  its currency, its oil production or exports, or in another major
                  export, can
                  also make it difficult to liquidate a position. Alternatively,
                  limits imposed by
                  futures exchanges or other regulatory organizations, such as accountability
                  levels, position limits and daily price fluctuation limits, may
                  contribute to a
                  lack of liquidity with respect to some commodity interests.
  Unexpected
                  market illiquidity may cause major losses to investors at any time
                  or from time
                  to time. In addition, USOF has not and does not intend to establish
                  a credit
                  facility, which would provide an additional source of liquidity
                  and instead will
                  rely only on the Treasuries, cash and/or cash equivalents that
                  it holds. The
                  anticipated large value of the positions in Oil Futures Contracts that the
                  General Partner will acquire or enter into for USOF, increases
                  the risk of
                  illiquidity. Such positions may be more difficult to liquidate
                  at favorable
                  prices and there is an additional risk that losses may be incurred
                  during the
                  period in which positions are being liquidated. The Other Oil Interests
                  that
                  USOF invests in, such as negotiated over-the-counter contracts, may have a
                  greater likelihood of being
                  illiquid since they are contracts between two parties that take
                  into account not
                  only market risk, but also the relative credit, tax, and settlement
                  risks under
                  such contracts. Such contracts also have limited transferability
                  that results
                  from such risks and the contract’s express limitations.
  Because
                    both Oil Futures Contracts and Other Oil Interests may be illiquid,
                    USOF’s oil
                    interests may be more difficult to liquidate at favorable prices
                    in periods of
                    illiquid markets and losses may be incurred during the period
                    in which positions
                    are being liquidated.
  If
                  the nature of hedgors and
                  speculators in futures markets has shifted such that crude oil
                  purchasers are
                  the predominant hedgors in the market, USOF might have to reinvest
                  at higher
                  futures prices or choose Other Oil Interests.
  The
                  changing nature of the hedgors and speculators in the crude oil
                  market
                  influences whether futures prices are above or below the expected
                  future spot
                  price. In order to induce speculators to take the corresponding
                  long side of the
                  same futures contract, crude oil producers must generally be willing
                  to sell
                  futures contracts at prices that are below expected future spot
                  prices.
                  Conversely, if the predominant hedgors in the futures market are
                  the purchasers
                  of the crude oil who purchase futures contracts to hedge against
                  a rise in
                  prices, then speculators will only take the short side of the futures
                  contract
                  if the futures price is greater than the expected future spot price
                  of crude
                  oil. This can have significant implications for USOF when it is
                  time to reinvest
                  the proceeds from a maturing futures contract into a new futures
                  contract.
  While
                  USOF does not intend to take
                  physical delivery of oil under Oil Futures Contracts, physical
                  delivery under
                  such contracts impacts the value of the contracts.
  While
                  USOF has not and does not intend to take physical delivery of oil
                  under its Oil
                  Futures Contracts, futures contracts are not required to be cash-settled,
                  and it
                  is possible to take delivery under these contracts. Storage costs
                  associated
                  with purchasing oil could result in costs and other liabilities
                  that could
                  impact the value of Oil Futures Contracts or Other Oil Interests.
                  Storage costs
                  include the time value of money invested in oil as a physical commodity
                  plus the
                  actual costs of storing the oil less any benefits from ownership
                  of oil that are
                  not obtained by the holder of a futures contract. In general, Oil
                  Futures
                  Contracts have a one-month delay for contract delivery and the
                  back month (the
                  back month is any future delivery month other than the spot month)
                  includes
                  storage costs. To the extent that these storage costs change for
                  oil while USOF
                  holds Oil Futures Contracts or Other Oil Interests, the value of
                  the Oil Futures
                  Contracts or Other Oil Interests, and therefore USOF’s NAV, may change as
                  well.
 36
 The
                  price relationship between the
                  near month contract and the next to near month contract that compose
                  the
                  Benchmark Oil Futures Contract will vary and may impact both the
                  total return
                  over time of USOF’s NAV, as well as the degree to which its total return tracks
                  other crude oil price indices’ total returns.
  The
                  design of USOF's  Benchmark Oil Futures Contract is such that every month
                  it begins by using the near month contract to expire until the near month
                  contract is within two weeks of expiration, when it will use the
                  next month
                  contract to expire as its benchmark contract and keeps that contract
                  as
                  its benchmark until it becomes the near month contract and close to
                  expiration. In the event of an oil futures market where near month
                  contracts
                  trade at a higher price than next to near month contracts, a situation
                  described
                  as “backwardation” in the futures market occurs. Absent the impact of the
                  overall movement in crude oil prices the value of the benchmark
                  contract would
                  tend to rise as it approaches expiration. As a result the total
                  return of the
                  Benchmark Oil Futures Contract would tend to track higher. Conversely,
                  in the
                  event of a crude oil futures market where near month contracts
                  trade at a lower
                  price than next to near month contracts, a situation described
                  as “contango” in
                  the futures market occurs. Absent the impact of the overall movement
                  in crude
                  oil prices the value of the benchmark contract would tend to decline
                  as it
                  approaches expiration. As a result the total return of the Benchmark
                  Oil Futures
                  Contract would tend to track lower. When compared to total return
                  of other price
                  indices, such as the spot price of crude oil, the impact of backwardation
                  and
                  contango may lead the total return of USOF’s NAV to vary significantly. In the
                  event of a prolonged period of contango, and absent the impact
                  of rising or
                  falling oil prices, this could have a significant negative impact
                  on USOF’s NAV
                  and total return.
  Regulation
                  of the commodity
                  interests and energy markets is extensive and constantly changing;
                  future
                  regulatory developments are impossible to predict but may significantly
                  and
                  adversely affect USOF.
  The
                  regulation of commodity interest transactions in the United States
                  is a rapidly
                  changing area of law and is subject to ongoing modification by
                  government and
                  judicial action. In addition, various national governments have
                  expressed
                  concern regarding the disruptive effects of speculative trading
                  in the energy
                  markets and the need to regulate the derivatives markets in general.
                  The effect
                  of any future regulatory change on USOF is impossible to predict,
                  but could be
                  substantial and adverse.
  Investing
                  in USOF for purposes of
                  hedging may be subject to several risks including the possibility
                  of losing the
                  benefit of favorable market movement.
  Participants
                  in the crude oil or in other industries may use USOF as a vehicle
                  to hedge the
                  risk of losses in their crude oil-related transactions. There are
                  several risks
                  in connection with using USOF as a hedging device. While hedging
                  can provide
                  protection against an adverse movement in market prices, it can
                  also preclude a
                  hedgor’s opportunity to benefit from a favorable market movement. In a
                  hedging
                  transaction, the hedgor may be concerned that the hedged item will
                  increase in
                  price, but must recognize the risk that the price may instead decline
                  and if
                  this happens he will have lost his opportunity to profit from the
                  change in
                  price because the hedging transaction will result in a loss rather
                  than a gain.
                  Thus, the hedgor foregoes the opportunity to profit from favorable
                  price
                  movements.
  In
                  addition, if the hedge is not a perfect one, the hedgor can lose
                  on the hedging
                  transaction and not realize an offsetting gain in the value of
                  the underlying
                  item being hedged.
  When
                  using futures contracts as a hedging technique, at best, the correlation
                  between
                  changes in prices of futures contracts and of the items being hedged
                  can be only
                  approximate. The degree of imperfection of correlation depends
                  upon
                  circumstances such as: variations in speculative markets, demand
                  for futures and
                  for oil products, technical influences in futures trading, and
                  differences
                  between anticipated energy costs being hedged and the instruments
                  underlying the
                  standard futures contracts available for trading. Even a well-conceived
                  hedge
                  may be unsuccessful to some degree because of unexpected market
                  behavior as well
                  as the expenses associated with creating the hedge.
  In
                  addition, using an investment in USOF as a hedge for changes in
                  energy costs
                  ( e.g. ,
                  investing in crude oil, heating oil, gasoline, natural gas or other
                  fuels, or
                  electricity) may not correlate because changes in the spot price
                  of crude oil
                  may vary from changes in energy costs because the spot price may
                  not be
                  at the same rate as changes in the price of other energy products,
                  and, in any
                  case, the price of crude oil does not reflect the refining, transportation,
                  and
                  other costs that may impact the hedgor’s energy costs.
 37
 An
                  investment in USOF may provide
                  little or no diversification benefits. Thus, in a declining market,
                  USOF may
                  have no gains to offset losses from other investments, and an investor
                  may
                  suffer losses on an investment in USOF while incurring losses with
                  respect to
                  other asset classes.
  Historically,
                  Oil Futures Contracts and Other Oil Interests have generally been
                  non-correlated
                  to the performance of other asset classes such as stocks and bonds.
                  Non-correlation means that there is a low statistically valid relationship
                  between the performance of futures and other commodity interest
                  transactions, on
                  the one hand, and stocks or bonds, on the other hand. However,
                  there can be no
                  assurance that such non-correlation will continue during future
                  periods. If,
                  contrary to historic patterns, USOF’s performance were to move in the same
                  general direction as the financial markets, investors will obtain
                  little or no
                  diversification benefits from an investment in the units. In such
                  a case, USOF
                  may have no gains to offset losses from other investments, and investors
                  may suffer losses on their investment in USOF at the same time
                  they incur losses
                  with respect to other investments.
  Variables
                  such as drought, floods, weather, embargoes, tariffs and other
                  political events
                  may have a larger impact on crude oil prices and crude oil-linked
                  instruments, including Oil Futures Contracts and Other Oil Interests,
                  than on
                  traditional securities. These additional variables may create additional
                  investment risks that subject USOF’s investments to greater volatility than
                  investments in traditional securities.
  Non-correlation
                  should not be confused with negative correlation, where the performance
                  of two
                  asset classes would be opposite of each other. There is no historic
                  evidence
                  that the spot price of crude oil and prices of other financial assets, such
                  as stocks and bonds, are negatively correlated. In the absence
                  of negative
                  correlation, USOF cannot be expected to be automatically profitable
                  during
                  unfavorable periods for the stock market, or vice versa.
  USOF’s
                  Operating
                  Risks
  USOF
                  is not a registered investment
                  company so unitholders do not have the protections of the 1940
                  Act.
  USOF
                  is
                  not an investment company subject to the 1940 Act. Accordingly, investors
                  do not have the protections afforded by that statute which, for
                  example,
                  requires investment companies to have a majority of
                  disinterested directors and regulates the relationship between
                  the investment
                  company and its investment manager.
  The
                  General Partner is leanly
                  staffed and relies heavily on key personnel to manage trading
                  activities.
  In
                    managing and directing the day-to-day activities and affairs
                    of USOF, the
                    General Partner relies heavily on Messrs. Nicholas Gerber, John Love
                    and John Hyland. If Messrs. Gerber, Love or Hyland were to leave
                    or be unable to carry out their present responsibilities, it
                    may have an adverse
                    effect on the management of USOF. Furthermore, Messrs. Gerber, Love
                    and Hyland are currently involved in the management of USNG, US12OF
                    and
                    USG, and the General Partner is currently in the process of registering
                    two
                    other exchange traded security funds, USHO and US12NG.  Messrs.
                    Gerber and Love are also employed by Ameristock Corporation, a registered
                    investment adviser that manages a public mutual fund. It is estimated
                    that Mr.
                    Gerber will spend approximately 50% of his time on USOF, USNG,
                    USHO, USG, US12OF
                    and US12NG matters.  Mr. Love will spend approximately 95% of his time
                    on USOF, USNG, USHO, USG, US12OF and US12NG matters and Mr. Hyland
                    will spend
                    approximately 75% of his time on USOF, USNG, USHO, USG, US12OF
                    and US12NG
                    matters. To the extent that the General Partner establishes additional
                    funds,
                    even greater demands will be placed on Messrs. Gerber, Love
                    and Hyland, as well as the other officers of the General Partner,
                    including
                    Mr. Mah, the Chief Financial Officer, and its Board of
                    Directors.
 38
 Accountability
                  levels, position
                  limits, and daily price fluctuation limits set by the exchanges
                  have the
                  potential to cause a tracking error, which could cause the price
                  of units to
                  substantially vary from the price of the Benchmark Oil Futures
                  Contract and
                  prevent investors from being able to effectively use USOF as a
                  way to hedge
                  against crude oil-related losses or as a way to indirectly invest
                  in crude
                  oil.
  U.S.
                  designated contract markets such as the NYMEX have established
                  accountability
                  levels and position limits on the maximum net long or net short futures
                  contracts in commodity interests that any person or group of persons under
                  common trading control (other as a hedge, which an investment in
                  USOF is not)
                  may hold, own or control. For example, the current accountability
                  level for
                  investments at any one time in the Benchmark Oil Futures Contract is
                  20,000. While this is not a fixed ceiling, it is a threshold above
                  which the
                  NYMEX may exercise greater scrutiny and control over an investor,
                  including
                  limiting an investor to holding no more than 20,000 Benchmark Oil
                  Futures
                  Contracts. With regard to position limits, the NYMEX limits an
                  investor from
                  holding more than 3,000 net futures in the last 3 days of trading
                  in the near
                  month contract to expire.
  In
                  addition to accountability levels and position limits, the NYMEX
                  also sets daily
                  price fluctuation limits on Oil Futures Contracts. The daily price
                  fluctuation limit establishes the maximum amount that the price
                  of a futures
                  contract may vary either up or down from the previous day’s settlement price.
                  Once the daily price fluctuation limit has been reached in a particular
                  Oil
                  Futures Contract, no trades may be made at a price beyond that
                  limit.
  For
                  example, the NYMEX imposes a $10.00 per barrel ($10,000 per contract)
                  price
                  fluctuation limit for the Benchmark Oil Futures Contract. This
                  limit is
                  initially based off of the previous trading day’s settlement price. If any
                  Benchmark Oil Futures Contract is traded, bid, or offered at the
                  limit for five
                  minutes, trading is halted for five minutes. When trading resumes
                  it begins at
                  the point where the limit was imposed and the limit is reset to
                  be $10.00 per
                  barrel in either direction of that point. If another halt were
                  triggered, the
                  market would continue to be expanded by $10.00 per barrel in either
                  direction
                  after each successive five-minute trading halt. There is no maximum
                  price
                  fluctuation limits during any one trading session.
  All
                  of
                  these limits may potentially cause a tracking error between the
                  price of the
                  units and the price of the Benchmark Oil Futures Contract.This
                  may in turn
                  prevent investors from being able to effectively use USOF as a
                  way to hedge
                  against oil-related losses or as a way to indirectly invest in
                  crude
                  oil.
  USOF
                  has
                  not limited the size of its offering and is committed to utilizing
                  substantially
                  all of its proceeds to purchase Oil Futures Contracts and Other
                  Oil Interests.
                  If USOF encounters accountability levels, position limits, or price
                  fluctuation
                  limits for crude oil contracts on the NYMEX, it has and will continue
                  to, if
                  permitted under applicable regulatory requirements, purchase futures
                  contracts
                  on the ICE Futures (formerly, the International Petroleum Exchange)
                  or other
                  exchanges that trade listed oil futures. The futures contracts
                  available on the
                  ICE Futures are generally comparable to the contracts on the NYMEX,
                  but they may
                  have different underlying commodities, sizes, deliveries, and
                  prices.
  There
                  are technical and fundamental
                  risks inherent in the trading system the General Partner intends
                  to
                  employ.
  The
                  General Partner’s trading system is quantitative in nature and it is possible
                  that the General Partner might make a mathematical error. In addition,
                  it is
                  also possible that a computer or software program may malfunction
                  and cause an
                  error in computation.
  USOF
                  and the General Partner may
                  have conflicts of interest, which may permit them to favor their
                  own interests
                  to the detriment of unitholders.
  USOF
                  and
                  the General Partner may have inherent conflicts to the extent the
                  General
                  Partner attempts to maintain USOF’s asset size in order to preserve its fee
                  income and this may not always be consistent with USOF’s objective of tracking
                  changes in the spot price of light, sweet crude oil. The General Partner’s
                  officers, directors and employees do not devote their time exclusively
                  to USOF.
                  These persons are directors, officers or employees of other entities
                  that may
                  compete with USOF for their services. They could have a conflict
                  between their
                  responsibilities to USOF and to those other entities.
 39
 In
                  addition, the General Partner’s principals, officers, directors or employees may
                  trade futures and related contracts for their own account. A conflict
                  of
                  interest may exist if their trades are in the same markets and
                  at the same time
                  as USOF trades using the clearing broker to be used by USOF. A
                  potential
                  conflict also may occur if the General Partner’s principals, officers, directors
                  or employees trade their accounts more aggressively or take positions
                  in their
                  accounts which are opposite, or ahead of, the positions taken by
                  USOF.
  The
                  General Partner has sole current authority to manage the investments
                  and
                  operations of USOF, and this may allow it to act in a way that
                  furthers its own
                  interests which may create a conflict with the best interests of
                  investors.
                  Limited partners have limited voting control, which will limit
                  the ability to
                  influence matters such as amendment of the LP Agreement, change
                  in USOF’s basic
                  investment policy, dissolution of this fund, or the sale or distribution
                  of
                  USOF’s assets.
  The
                    General Partner serves as the general partner to each of USOF,
                    USNG, US12OF and
                    USG and will serve as the general partner for USHO and US12NG, if
                    such
                    other funds offer their securities to the public or begin operations.
                    The
                    General Partner may have a conflict to the extent that its trading
                    decisions for
                    USOF may be influenced by the effect they would have on the other
                    funds it
                    manages. These trading decisions may be influenced since the
                    General Partner
                    also serves as the general partner for all of the funds and is
                    required to meet
                    all of the funds’ investment objectives as well as USOF’s. If the General
                    Partner believes that a trading decision it made on behalf of
                    USOF might (i)
                    impede its other funds from reaching their investment objectives,
                    or (ii)
                    improve the likelihood of meeting its other funds’ objectives, then the General
                    Partner may choose to change its trading decision for USOF, which
                    could either
                    impede or improve the opportunity for USOF from meeting its investment
                    objective. In addition, the General Partner is required to indemnify
                    the
                    officers and directors of its other funds if the need for indemnification
                    arises. This potential indemnification will cause the General
                    Partner’s assets
                    to decrease. If the General Partner’s other sources of income are not sufficient
                    to compensate for the indemnification, then the General Partner
                    may terminate
                    and you could lose your investment.
  Unitholders
                  may only vote on the
                  removal of the General Partner and limited partners have only limited
                  voting
                  rights. Unitholders and limited partners will not participate in
                  the management
                  of USOF and do not control the General Partner so they will not
                  have influence
                  over basic matters that affect USOF.
  Unitholders
                    that have not applied to become limited partners have no voting
                    rights, other
                    than to remove the General Partner. Limited partners will have
                    limited voting
                    rights with respect to USOF’s affairs. Unitholders may remove the General
                    Partner only if 66 and 2/3% of the unitholders elect to do so.
                    Unitholders and
                    limited partners will not be permitted to participate in the
                    management or
                    control of USOF or the conduct of its business. Unitholders and
                    limited partners
                    must therefore rely upon the duties and judgment of the General
                    Partner to
                    manage USOF’s affairs.
   The
                  General Partner may manage a
                  large amount of assets and this could affect USOF’s ability to trade
                  profitably.
  Increases
                  in assets under management may affect trading decisions. In general,
                  the General
                  Partner does not intend to limit the amount of assets of USOF that
                  it may
                  manage. The more assets the General Partner manages, the more difficult
                  it may
                  be for it to trade profitably because of the difficulty of trading
                  larger
                  positions without adversely affecting prices and performance and
                  of managing
                  risk associated with larger positions.
  USOF
                  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.
  USOF
                  may
                  terminate at any time, regardless of whether USOF has incurred
                  losses, subject
                  to the terms of the LP Agreement. In particular, unforeseen circumstances,
                  including the death, adjudication of incompetence, bankruptcy,
                  dissolution, or
                  removal of the General Partner could cause USOF to terminate unless
                  a majority
                  interest of the limited partners within 90 days of the event elects
                  to continue
                  the partnership and appoints a successor general partner, or the
                  affirmative
                  vote of a majority interest of the limited partners subject to
                  certain
                  conditions. However, no level of losses will require the General
                  Partner to
                  terminate USOF. USOF’s termination would cause the liquidation and potential
                  loss of an investor's investment. Termination could also negatively
                  affect the
                  overall maturity and timing of an investor's investment
                  portfolio.
 40
 Limited
                  partners may not have
                  limited liability in certain circumstances, including potentially
                  having
                  liability for the return of wrongful distributions.
  Under
                  Delaware law, a limited partner might be held liable for our obligation
                  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.
  A
                  limited
                  partner will not be liable for assessments in addition to its initial
                  capital
                  investment in any of our capital securities representing units.
                  However, a
                  limited partner may be required to repay to us any amounts wrongfully
                  returned
                  or distributed to it under some circumstances. Under Delaware law,
                  we may not
                  make a distribution to limited partners if the distribution causes
                  our
                  liabilities (other than liabilities to partners on account of their
                  partnership
                  interests and nonrecourse liabilities) to exceed the fair value
                  of our assets.
                  Delaware law provides that a limited partner who receives such
                  a distribution
                  and knew at the time of the distribution that the distribution
                  violated the law
                  will be liable to the limited partnership for the amount of the
                  distribution for
                  three years from the date of the distribution.
  With
                  adequate notice, a limited
                  partner may be required to withdraw from the partnership for any
                  reason.
  If
                  the
                  General Partner gives at least fifteen (15) days’ written notice to a limited
                  partner, then the General Partner may for any reason, in its sole
                  discretion,
                  require any such limited partner to withdraw entirely from the
                  partnership or to
                  withdraw a portion of his partner capital account. The General
                  Partner may
                  require withdrawal even in situations where the limited partner
                  has complied
                  completely with the provisions of the LP Agreement.
  USOF’s
                  existing units are, and any
                  units USOF issues in the future will be, subject to restrictions
                  on transfer.
                  Failure to satisfy these requirements will preclude a transferee
                  from being able
                  to have all the rights of a limited partner.
  No
                  transfer of any unit or interest therein may be made if such transfer
                  would (a)
                  violate the then applicable federal or state securities laws or
                  rules and
                  regulations of the SEC, any state securities commission, the CFTC
                  or any other
                  governmental authority with jurisdiction over such transfer, or
                  (b) cause USOF
                  to be taxable as a corporation or affect USOF’s existence or qualification as a
                  limited partnership. In addition, investors may only become limited
                  partners if
                  they transfer their units to purchasers that meet certain conditions
                  outlined in
                  the LP Agreement, which provides that each record holder or limited
                  partner or
                  unitholder applying to become a limited partner (each a record
                  holder) may be
                  required by the General Partner to furnish certain information,
                  including that
                  holder’s nationality, citizenship or other related status. A transferee
                  who is
                  not a U.S. resident may not be eligible to become a record holder
                  or a limited
                  partner if its ownership would subject USOF to the risk of cancellation
                  or
                  forfeiture of any of its assets under any federal, state or local
                  law or
                  regulation. All purchasers of USOF’s units, who wish to become limited partners
                  or record holders, and receive cash distributions, if any, or have
                  certain other
                  rights, must deliver an executed transfer application in which
                  the purchaser or
                  transferee must certify that, among other things, he, she or it agrees
                  to
                  be bound by USOF’s LP Agreement and is eligible to purchase USOF’s securities.
                  Any transfer of units will not be recorded by the transfer agent
                  or recognized
                  by us unless a completed transfer application is delivered to the
                  General
                  Partner or the Administrator. A person purchasing USOF’s existing units, who
                  does not execute a transfer application and certify that the purchaser
                  is
                  eligible to purchase those securities acquires no rights in those
                  securities
                  other than the right to resell those securities. Whether or not
                  a transfer
                  application is received or the consent of the General Partner obtained,
                  our
                  units will be securities and will be transferable according to
                  the laws
                  governing transfers of securities. See “Transfer of Units.”
  USOF
                  does not expect to make cash
                  distributions.
  The
                  General Partner intends to re-invest any realized gains in additional
                  oil
                  interests rather than distributing cash to limited partners. Therefore,
                  unlike
                  mutual funds, commodity pools or other investment pools that actively
                  manage
                  their investments in an attempt to realize income and gains from
                  their investing
                  activities and distribute such income and gains to their investors,
                  USOF
                  generally does not expect to distribute cash to limited partners.
                  An investor
                  should not invest in USOF if it will need cash distributions from
                  USOF to pay
                  taxes on its share of income and gains of USOF, if any, or for
                  any other reason.
                  Although USOF does not intend to make cash distributions, the income
                  earned from
                  its investments held directly or posted as margin may reach levels
                  that merit
                  distribution, e.g., at levels where such income is not necessary
                  to support its
                  underlying investments in oil interests and investors adversely
                  react to being
                  taxed on such income without receiving distributions that could
                  be used to pay
                  such tax. If this income becomes significant then cash distributions
                  may be
                  made.
 41
 There
                  is a risk that USOF will not
                  earn trading gains sufficient to compensate for the fees and expenses
                  that it
                  must pay and as such USOF may not earn any profit.
 USOF
          pays
          brokerage charges of approximately 0.15%, futures commission merchant fees
          of
          $3.50 per buy or sell, management fees of 0.50% of NAV on the first
          $1,000,000,000 of assets and 0.20% of NAV after the first $1,000,000,000
          of
          assets, and over-the-counter spreads and extraordinary expenses ( i.e. expenses
          not in the ordinary course of business, including the indemnification of
          any
          person against liabilities and obligations to the extent permitted by law
          and
          required under the LP Agreement and under agreements entered into by the
          General
          Partner on USOF’s behalf and the bringing and defending of actions at law or in
          equity and otherwise engaging in the conduct of litigation and the incurring
          of
          legal expenses and the settlement of claims and litigation) that can not
          be
          quantified. These fees and expenses must be paid in all cases regardless
          of
          whether USOF’s activities are profitable. Accordingly, USOF must earn trading
          gains sufficient to compensate for these fees and expenses before it can
          earn
          any profit.
  USOF
            has historically depended upon its affiliates to pay all its expenses.
            If this
            offering of units does not raise sufficient funds to pay USOF’s future expenses
            and no other source of funding of expenses is found, USOF may be forced
            to
            terminate and investors may lose all or part of their investment.
 
 Prior
            to
            the offering of units that commenced on January 30, 2007, all of USOF’s expenses
            were funded by the General Partner and its affiliates. These payments
            by the
            General Partner and its affiliates were  designed to allow USOF the
            ability to commence the public offering of its units. USOF now directly
            pays
            certain of these fees and expenses.  The General Partner will continue
            to pay other fees and expenses, as set forth in the LP Agreement. If
            the General
            Partner and USOF are unable to raise sufficient funds to cover their
            expenses or
            locate any other source of funding, USOF may be forced to terminate and
            investors may lose all or part of their investment.
  USOF
          may incur higher fees and
          expenses upon renewing existing or entering into new contractual
          relationships.
  The
          clearing arrangements between the clearing brokers and USOF generally are
          terminable by the clearing brokers once the clearing broker has given USOF
          notice. Upon termination, the General Partner may be required to renegotiate
          or
          make other arrangements for obtaining similar services if USOF intends
          to
          continue trading in Oil Futures Contracts or Other Oil Interest contracts
          at its
          present level of capacity.
  The
          services of any clearing broker may not be available, or even if available,
          these services may not be available on the terms as favorable as those
          of the
          expired or terminated clearing arrangements.
  USOF
          may miss certain trading
          opportunities because it will not receive the benefit of the expertise
          of
          independent trading advisors.
  The
          General Partner does not employ trading advisors for USOF; however, it
          reserves
          the right to employ them in the future. The only advisor to USOF is the
          General
          Partner. A lack of independent trading advisors may be disadvantageous
          to USOF
          because it will not receive the benefit of a trading advisor’s
          expertise.
  An
          unanticipated number of
          redemption requests during a short period of time could have an adverse
          effect
          on the NAV of USOF.
  If
          a
          substantial number of requests for redemption of Redemption Baskets are
          received
          by USOF during a relatively short period of time, USOF may not be able
          to
          satisfy the requests from USOF’s assets not committed to trading. As a
          consequence, it could be necessary to liquidate positions in USOF’s trading
          positions before the time that the trading strategies would otherwise dictate
          liquidation.
  The
          failure or bankruptcy of a
          clearing broker could result in a substantial loss of USOF’s
          assets.
  Under
          CFTC regulations, a clearing broker maintains customers’ assets in a bulk
          segregated account. If a clearing broker fails to do so, or is unable to
          satisfy
          a substantial deficit in a customer account, its other customers may be
          subject
          to risk of loss of their funds in the event of that clearing broker’s
          bankruptcy. In that event, the clearing broker’s customers, such as USOF, are
          entitled to recover, even in respect of property specifically traceable
          to them,
          only a proportionate share of all property available for distribution to
          all of
          that clearing broker’s customers. USOF also may be subject to the risk of the
          failure of, or delay in performance by, any exchanges and markets and their
          clearing organizations, if any, on which commodity interest contracts are
          traded.
  From
          time
          to time, the clearing brokers may be subject to legal or regulatory proceedings
          in the ordinary course of their business. A clearing broker’s involvement in
          costly or time-consuming legal proceedings may divert financial resources
          or
          personnel away from the clearing broker’s trading operations, which could impair
          the clearing broker’s ability to successfully execute and clear USOF’s
          trades.
 42
 Third
            parties may infringe upon or
            otherwise violate intellectual property rights or assert that the General
            Partner has infringed or otherwise violated their intellectual property
            rights,
            which may result in significant costs and diverted
            attention.
  Third
            parties may utilize USOF’s intellectual property or technology, including the
            use of its business methods, trademarks and trading program software,
            without
            permission. The General Partner has a patent pending for USOF’s business method
            and it is registering its trademarks. USOF does not currently have any
            proprietary software. However, if it obtains proprietary software in
            the future,
            then any unauthorized use of USOF’s proprietary software and other technology
            could also adversely affect its competitive advantage. USOF may have
            difficulty
            monitoring unauthorized uses of its patents, trademarks, proprietary
            software
            and other technology. Also, third parties may independently develop business
            methods, trademarks or proprietary software and other technology similar
            to that
            of the General Partner or claim that the General Partner has violated
            their
            intellectual property rights, including their copyrights, trademark rights,
            trade names, trade secrets and patent rights. As a result, the General
            Partner
            may have to litigate in the future to protect its trade secrets, determine
            the
            validity and scope of other parties’ proprietary rights, defend itself against
            claims that it has infringed or otherwise violated other parties’ rights, or
            defend itself against claims that its rights are invalid. Any litigation
            of this
            type, even if the General Partner is successful and regardless of the
            merits,
            may result in significant costs, divert its resources from USOF, or require
            it
            to change its proprietary software and other technology or enter into
            royalty or
            licensing agreements. See "Legal Risks" below.
  The
            success of USOF depends on the
            ability of the General Partner to accurately implement trading systems,
            and any
            failure to do so could subject USOF to losses on such
            transactions.
  The
            General Partner uses mathematical formulas built into a generally available
            spreadsheet program to decide whether it should buy or sell oil interests
            each
            day. Specifically, the General Partner uses the spreadsheet to make mathematical
            calculations and to monitor positions in oil interests and Treasuries
            and
            correlations to the spot price of light, sweet crude oil. The General
            Partner must accurately process the spreadsheet’s outputs and execute the
            transactions called for by the formulas. In addition, USOF relies on
            the General
            Partner to properly operate and maintain its computer and communications
            systems. Execution of the formulas
            and operation of the systems are subject to human error. Any failure,
            inaccuracy
            or delay in implementing any of the formulas or systems and executing
            USOF’s
            transactions could impair its ability to achieve USOF’s investment objective. It
            could also result in decisions to undertake transactions based on inaccurate
            or
            incomplete information. This could cause substantial losses on
            transactions.
  USOF
            may experience substantial
            losses on transactions if the computer or communications system
            fails.
  USOF’s
            trading activities, including its risk management, depend on the integrity
            and
            performance of the computer and communications systems supporting them.
            Extraordinary transaction volume, hardware or software failure, power
            or
            telecommunications failure, a natural disaster or other catastrophe could
            cause
            the computer systems to operate at an unacceptably slow speed or even
            fail. Any
            significant degradation or failure of the systems that the General Partner
            uses
            to gather and analyze information, enter orders, process data, monitor
            risk
            levels and otherwise engage in trading activities may result in substantial
            losses on transactions, liability to other parties, lost profit opportunities,
            damages to the General Partner’s and USOF’s reputations, increased operational
            expenses and diversion of technical resources.
  If
            the computer and communications
            systems are not upgraded, as needed, USOF’s financial condition could be
            harmed.
  The
            development of complex computer and communications systems and new technologies
            may render the existing computer and communications systems supporting
            USOF’s
            trading activities obsolete. In addition, these computer and communications
            systems must be compatible with those of third parties, such as the systems
            of
            exchanges, clearing brokers and the executing brokers. As a result, if
            these
            third parties upgrade their systems, the General Partner will need to
            make
            corresponding upgrades to continue effectively its trading activities.
            USOF’s
            future success will depend on USOF’s ability to respond to changing technologies
            on a timely and cost-effective basis.
 43
 USOF
            depends on the reliable
            performance of the computer and communications systems of third parties,
            such as
            brokers and futures exchanges, and may experience substantial losses
            on
            transactions if they fail.
  USOF
            depends on the proper and timely function of complex computer and communications
            systems maintained and operated by the futures exchanges, brokers and
            other data
            providers that the General Partner uses to conduct trading activities.
            Failure
            or inadequate performance of any of these systems could adversely affect
            the
            General Partner’s ability to complete transactions, including its ability to
            close out positions, and result in lost profit opportunities and significant
            losses on commodity interest transactions. This could have a material
            adverse
            effect on revenues and materially reduce USOF’s available capital. For example,
            unavailability of price quotations from third parties may make it difficult
            or
            impossible for the General Partner to use its proprietary software that
            it
            relies upon to conduct its trading activities. Unavailability of records
            from
            brokerage firms may make it difficult or impossible for the General Partner
            to
            accurately determine which transactions have been executed or the details,
            including price and time, of any transaction executed. This unavailability
            of
            information also may make it difficult or impossible for the General
            Partner to
            reconcile its records of transactions with those of another party or
            to
            accomplish settlement of executed transactions.
  The
            occurrence of a terrorist
            attack, or the outbreak, continuation or expansion of war or other hostilities
            could disrupt USOF’s trading activity and materially affect USOF’s
            profitability.
  The
            operations of USOF, the exchanges, brokers and counterparties with which
            USOF
            does business, and the markets in which USOF does business could be severely
            disrupted in the event of a major terrorist attack or the outbreak, continuation
            or expansion of war or other hostilities. The terrorist attacks of September
            11,
            2001 and the war in Iraq, global anti-terrorism initiatives and political
            unrest
            in the Middle East and Southeast Asia continue to fuel this
            concern.
  Risk
            of Leverage and
            Volatility
  If
            the General Partner permits USOF
            to become leveraged, investors could lose all or substantially all of
            their
            investment if USOF’s trading positions suddenly turn
            unprofitable.
  Commodity
            pools’ trading positions in futures contracts or other commodity interests are
            typically required to be secured by the deposit of margin funds that
            represent
            only a small percentage of a futures contract’s (or other commodity interests’)
            entire face value. This feature permits commodity pools to “leverage” their
            assets by purchasing
            or selling futures contracts (or other commodity interests) with an aggregate
            value in excess of the commodity pool’s assets. While this leverage can increase
            the pool’s profits, relatively small adverse movements in the price of the
            pool’s futures contracts can cause significant losses to the pool. While the
            General Partner does not currently leverage USOF’s assets, it is not prohibited
            from doing so under the LP Agreement or otherwise.
  The
              price of crude oil is volatile which could cause large fluctuations
              in the price
              of units.
  Movements
              in the price of crude oil may be the result of factors outside of the
              General
              Partner’s control and may not be anticipated by the General Partner. For
              example, price movements for barrels of oil are influenced by, among
              other
              things:
 
 •
                    changes
                        in interest rates;
 •
                    actions
                        by oil producing countries such as the OPEC
                        countries;
 •
                    governmental,
                        agricultural, trade, fiscal, monetary and exchange control
                        programs and
                        policies;
 •
                    weather
                        and climate conditions;
 •
                    changing
                        supply and demand relationships, including but not limited
                        to increased
                        demand by other countries such as
                        China;
 •
                    changes
                        in balances of payments and trade;
 •
                    U.S.
                        and international rates of
                        inflation;
 •
                    currency
                        devaluations and revaluations;
 •
                    U.S.
                        and international political and economic events;
                        and
 •
                    changes
                        in philosophies and emotions of market
                        participants.
  Over-the-Counter
            Contract
            Risk
  Over-the-counter
            transactions are
            subject to little, if any, regulation.
  A
            portion
            of USOF’s assets may be used to trade over-the-counter oil interest contracts,
            such as forward contracts or swap or spot contracts. Over-the-counter
            contracts
            are typically traded on a principal-to-principal basis through dealer
            markets
            that are dominated by major money center and investment banks and other
            institutions and are essentially unregulated by the CFTC. Investors therefore
            do
            not receive the protection of CFTC regulation or the statutory scheme
            of the CEA
            in connection with this trading activity by USOF. The markets for
            over-the-counter contracts rely upon the integrity of market participants
            in
            lieu of the additional regulation imposed by the CFTC on participants
            in the
            futures markets. The lack of regulation in these markets could expose
            USOF in
            certain circumstances to significant losses in the event of trading abuses
            or
            financial failure by participants.
 44
 USOF
            will be subject to credit risk
            with respect to counterparties to over-the-counter contracts entered
            into by
            USOF or held by special purpose or structured
            vehicles.
  USOF
            faces the risk of non-performance by the counterparties to the over-the-counter
            contracts. Unlike in futures contracts, the counterparty to these contracts
            is
            generally a single bank or other financial institution, rather than a
            clearing
            organization backed by a group of financial institutions. As a result,
            there
            will be greater counterparty credit risk in these transactions. A counterparty
            may not be able to meet its obligations to USOF, in which case USOF could
            suffer
            significant losses on these contracts.
  If
            a
            counterparty becomes bankrupt or otherwise fails to perform its obligations
            due
            to financial difficulties, USOF may experience significant delays in
            obtaining
            any recovery in a bankruptcy or other reorganization proceeding. USOF
            may obtain
            only limited recovery or may obtain no recovery in such
            circumstances.
  USOF
            may be subject to liquidity
            risk with respect to its over-the-counter contracts.
  Over-the-counter
            contracts may have terms that make them less marketable than Oil Futures
            Contracts. Over-the-counter contracts are less marketable because they
            are not
            traded on an exchange, do not have uniform terms and conditions, and
            are entered
            into based upon the creditworthiness of the parties and the availability
            of
            credit support, such
            as
            collateral, and in general, they are not transferable without the consent
            of the
            counterparty. These conditions diminish the ability to realize the full
            value of
            such contracts.
  Risk
            of Trading in International
            Markets
  Trading
            in international markets
            would expose USOF to credit and regulatory risk.
  The
            General Partner invests primarily in Oil Futures Contracts, a significant
            portion of which are traded on United States exchanges including the
            NYMEX.
            However, a portion of USOF’s trades take place on markets and exchanges outside
            the United States. Some non-U.S. markets present risks because they are
            not
            subject to the same degree of regulation as their U.S. counterparts.
            None of the
            CFTC, NFA, or any domestic exchange regulates activities of any foreign
            boards
            of trade or exchanges, including the execution, delivery and clearing
            of
            transactions, nor has the power to compel enforcement of the rules of
            a foreign
            board of trade or exchange or of any applicable non-U.S. laws. Similarly,
            the
            rights of market participants, such as USOF, in the event of the insolvency
            or
            bankruptcy of a non-U.S. market or broker are also likely to be more
            limited
            than in the case of U.S. markets or brokers. As a result, in these markets,
            USOF
            has less legal and regulatory protection than it does when it trades
            domestically.
  In
            some
            of these non-U.S. markets, the performance on a contract is the responsibility
            of the counterparty and is not backed by an exchange or clearing corporation
            and
            therefore exposes USOF to credit risk. Trading in non-U.S. markets also
            leaves
            USOF susceptible to swings in the value of the local currency against
            the U.S.
            dollar. Additionally, trading on non-U.S. exchanges is subject to the
            risks
            presented by exchange controls, expropriation, increased tax burdens
            and
            exposure to local economic declines and political instability. An adverse
            development with respect to any of these variables could reduce the profit
            or
            increase the loss earned on trades in the affected international
            markets.
 45
 International
            trading activities
            subject USOF to foreign exchange risk.
  The
            price
            of any non-U.S. futures, options on futures or other commodity interest
            contract
            and, therefore, the potential profit and loss on such contract, may be
            affected
            by any variance in the foreign exchange rate between the time the order
            is
            placed and the time it is liquidated, offset or exercised. As a result,
            changes
            in the value of the local currency relative to the U.S. dollar may cause
            losses
            to USOF even if the contract traded is profitable.
  USOF’s
            international trading would
            expose it to losses resulting from non-U.S. exchanges that are less developed
            or
            less reliable than United States exchanges.
  Some
            non-U.S. exchanges may be in a more developmental stage so that prior
            price
            histories may not be indicative of current price dynamics. In addition,
            USOF may
            not have the same access to certain positions on foreign trading exchanges
            as do
            local traders, and the historical market data on which General Partner
            bases its
            strategies may not be as reliable or accessible as it is for U.S.
            exchanges.
  Tax
            Risk
  An
            investor's tax liability may
            exceed the amount of distributions, if any, on its
            units.
  Cash
            or
            property will be distributed at the sole discretion of the General Partner,
            and
            the General Partner currently does not intend to make cash or other
            distributions with respect to units. Investors will be required to pay
            U.S.
            federal income tax and, in some cases, state, local, or foreign income
            tax, on
            their allocable share of USOF’s taxable income, without regard to whether they
            receive distributions or the amount of any distributions. Therefore,
            the tax
            liability of an investor with respect to its units may exceed the amount of
            cash or value of property (if any) distributed.
  An
            investor's allocable share of
            taxable income or loss may differ from its economic income or loss on
            its
            units.
  Due
            to
            the application of the assumptions and conventions applied by USOF in
            making
            allocations for tax purposes and other factors, an investor's allocable
            share of
            USOF’s income, gain, deduction or loss may be different than its economic
            profit or loss from its units for a taxable year. This difference could
            be
            temporary or permanent and, if permanent, could result in it being taxed
            on
            amounts in excess of its economic income.
  Items
            of income, gain, deduction,
            loss and credit with respect to units could be reallocated if the IRS
            does not
            accept the assumptions and conventions applied by USOF in allocating
            those
            items, with potential adverse consequences for an
            investor.
  The
            U.S.
            tax rules pertaining to partnerships are complex and their application
            to large,
            publicly traded partnerships such as USOF is in many respects uncertain.
            USOF
            applies certain assumptions and conventions in an attempt to comply with
            the
            intent of the applicable rules and to report taxable income, gains, deductions,
            losses and credits in a manner that properly reflects unitholders’ economic
            gains and losses. These assumptions and conventions may not fully comply
            with
            all aspects of the Internal Revenue Code (the “Code”) and applicable Treasury
            Regulations, however, and it is possible that the U.S. Internal Revenue
            Service
            will successfully challenge our allocation methods and require us to
            reallocate
            items of income, gain, deduction, loss or credit in a manner that adversely
            affects investors. If this occurs, investors may be required to file
            an amended
            tax return and to pay additional taxes plus deficiency interest.
 46
 We
            could be treated as a corporation
            for federal income tax purposes, which may substantially reduce the value
            of the
            units.
  USOF
            has
            received an opinion of counsel that, under current U.S. federal income
            tax laws,
            USOF will be treated as a partnership that is not taxable as a corporation
            for
            U.S. federal income tax purposes, provided that (i) at least 90 percent
            of
            USOF’s annual gross income consists of “qualifying income” as defined in the
            Code, (ii) USOF is organized and operated in accordance with its governing
            agreements and applicable law and (iii) USOF does not elect to be taxed
            as a
            corporation for federal income tax purposes. Although the General Partner
            anticipates that USOF will satisfy the “qualifying income” requirement for all
            of its taxable years, that result cannot be assured. USOF has not requested
            and
            will not request any ruling from the IRS with respect to its classification
            as a
            partnership not taxable as a corporation for federal income tax purposes.
            If the
            IRS were to successfully assert that USOF is taxable as a corporation
            for
            federal income tax purposes in any taxable year, rather than passing
            through its
            income, gains, losses and deductions proportionately to unitholders,
            USOF would
            be subject to tax on its net income for the year at corporate tax rates.
            In
            addition, although the General Partner does not currently intend to make
            distributions with respect to units, any distributions would be taxable
            to
            unitholders as dividend income. Taxation of USOF as a corporation could
            materially reduce the after-tax return on an investment in units and
            could
            substantially reduce the value of the units.
  Legal
            Risks
 USOF
              has been notified of intellectual property rights that could adversely
              impact
              USOF.
 
 Goldman,
              Sachs & Co. (“Goldman Sachs”) sent USOF a letter on March 17, 2006,
              providing USOF and the General Partner notice under 35 U.S.C. Section
              154(d) of
              two pending United States patent applications, Publication Nos. 2004/0225593A1
              and 2006/0036533A1. Both patent applications are generally directed
              to a method
              and system for creating and administering a publicly traded interest
              in a
              commodity pool. In particular, the Abstract of each patent application
              defines a
              means for creating and administering a publicly traded interest in
              a commodity
              pool that includes the steps of forming a commodity pool having a first
              position
              in a futures contract and a corresponding second position in a margin
              investment, and issuing equity interests of the commodity pool to third
              party
              investors. Subsequently, two U.S. Patents were issued; the first, patent
              number
              US7,283,978B2, was issued on October 16, 2007, and the second, patent
              number
              US7,319,984B2, was issued on January 15, 2008.
 
 Preliminarily,
              USOF's management is of the view that the structure and operations of USOF
              and its affiliated commodity pools do not infringe these patents. USOF
              is also
              in the process of reviewing prior art (prior structures and operations
              of
              similar investment vehicles) that may invalidate one or more of the
              claims in
              these patents. In addition, USOF has retained patent counsel to advise
              it on
              these matters and is in the process of obtaining their opinions regarding
              the
              non-infringement of each of these patents by USOF and/or the patents'
              invalidity
              based on prior art. If the patents were alleged to apply to USOF's
              structure
              and/or operations, and are found by a court to be valid and infringed,
              Goldman
              Sachs may be awarded significant monetary damages and/or injunctive
              relief. See
              “USOF's Operating Risks — Third parties may infringe upon or otherwise
              violate intellectual property rights or assert that the General Partner
              has
              infringed or otherwise violated their intellectual property rights,
              which may
              result in significant costs and diverted attention.”
 47
  Item 1B.
                    Unresolved
                        Staff
                        Comments.
 
 Not
              applicable.
 
 Item 2.
                    Properties.
 
 Not
              applicable.
  Item 3.
                    Legal
                        Proceedings.
  Although
              USOF may, from time to time, be involved in litigation arising out
              of its
              operations in the normal course
              of
              business or otherwise, USOF is currently not a party to any pending
              material
              legal proceedings, except for the items noted below.
  Goldman
                Sachs
  Goldman
                  Sachs sent USOF a letter on March 17, 2006, providing USOF and
                  the General
                  Partner notice under 35 U.S.C. Section 154(d) of two pending United
                  States
                  patent applications, Publication Nos. 2004/0225593A1 and 2006/0036533A1.
                  Both
                  patent applications are generally directed to a method and system
                  for creating
                  and administering a publicly traded interest in a commodity pool.
                  In particular,
                  the Abstract of each patent application defines a means for creating
                  and
                  administering a publicly traded interest in a commodity pool that
                  includes the
                  steps of forming a commodity pool having a first position in a
                  futures contract
                  and a corresponding second position in a margin investment, and
                  issuing equity
                  interests of the commodity pool to third party investors. Subsequently,
                  two U.S.
                  Patents were issued; the first, patent number US7,283,978B2, was
                  issued on
                  October 16, 2007, and the second, patent number US7,319,984B2,
                  was issued on
                  January 15, 2008.
 
 Preliminarily, USOF's
                  management is of the view that the structure and operations of USOF and its
                  affiliated commodity pools do not infringe these patents. USOF
                  is also in the
                  process of reviewing prior art (prior structures and operations
                  of similar
                  investment vehicles) that may invalidate one or more of the claims
                  in these
                  patents. In addition, USOF has retained patent counsel to advise
                  it on these
                  matters and is in the process of obtaining their opinions regarding
                  the
                  non-infringement of each of these patents by USOF and/or the patents'
                  invalidity
                  based on prior art. If the patents were alleged to apply to USOF's
                  structure
                  and/or operations, and are found by a court to be valid and infringed,
                  Goldman
                  Sachs may be awarded significant monetary damages and/or injunctive
                  relief. See
                  “USOF's Operating Risks — Third parties may infringe upon or otherwise
                  violate intellectual property rights or assert that the General
                  Partner has
                  infringed or otherwise violated their intellectual property rights,
                  which may
                  result in significant costs and diverted attention.”
 48
 Item 4.
                    Submission
                        of Matters to a Vote
                        of Security Holders.
 
 Not
              applicable.
  Part
                II
 
 Item 5.
                      Market
                          for Registrant’s Common
                          Equity, Related Stockholder Matters and Issuer Purchases
                          of Equity
                          Securities.
  Price
                  Range of
                  Units
  USOF’s
                  units have traded on the AMEX under the symbol “USO” since its initial
                  public offering on April 10, 2006. The following table sets forth
                  the range of
                  reported high and low sales prices of the units as reported on
                  AMEX for the
                  periods indicated below.
  High
                        
                        LowFiscal
                            year 2007First
                            quarter
                        
                        $
                        53.62
                        
                        $
                        43.23Second
                            quarter
                        
                        $
                        53.56
                        
                        $
                        48.01Third
                            quarter
                        
                        $
                        63.44
                        
                        $
                        52.35Fourth
                            quarter
                        
                        $
                        77.34
                        
                        $
                        60.76
  High
                          
                          LowFiscal
                              year 2006Second
                              quarter  (beginning April 10, 2006)
                          
                          $
                          73.23
                          
                          $
                          64.89Third
                              quarter
                          
                          $
                          74.60
                          
                          $
                          54.06Fourth
                              quarter
                          
                          $
                          56.90
                          
                          $
                          50.25
 As
                  of
                  December 31, 2007, USOF had 14,504 holders
                  of units.
 49
 D ividends
 USOF
                has
                not made and does not intend to make cash distributions to its unitholders.
 
 Issuer
                Purchases of Equity
                Securities
  USOF
                does
                not purchase units directly from its unitholders; however, in connection
                with
                its redemption of baskets held by Authorized Purchasers, USOF redeemed
                875
                baskets (comprising 87,500,000 units) during the year ended December
                31,
                2007.
 Item 6.
                    Selected
                        Financial
                        Data.
 
 Financial
              Highlights (for the year
              ended December 31, 2007)
 (Dollar
              amounts in 000’s except for
              Loss per unit)
  Total
                          assets
                      
                      $
                      485,817Net
                          realized and unrealized gain on futures transactions, inclusive
                          of
                          commissions
                      
                      $
                      254,426Net
                          income
                      
                      $
                      284,416Weighted-average
                          limited partnership units
                      
                      
                      13,730,137Net
                        income per unit
                      
                      $
                      23.95Net
                          income per weighted average unit
                      
                      $
                      20.71Cash
                          at end of year
                      
                      $
                      354,816
 50
 Item 7.
                    Management’s
                        Discussion and
                        Analysis of Financial Condition and Results of
                        Operations.
  The
              following discussion should be read in conjunction with the consolidated
              financial statements and the notes thereto of USOF included elsewhere in
              this annual report on Form 10-K.
 
 Forward-Looking
                Information
  This
                annual report on Form 10-K, including this "Management's Discussion
                and Analysis
                of Financial Condition and Results of Operations," contains forward-looking
                statements regarding the plans and objectives of management for future
                operations. This information may involve known and unknown risks,
                uncertainties
                and other factors that may cause USOF's actual results, performance
                or
                achievements to be materially different from future results, performance
                or
                achievements expressed or implied by any forward-looking statements.
                Forward-looking statements, which involve assumptions and describe USOF's
                future plans, strategies and expectations, are generally identifiable
                by use of
                the words “may,” “will,” “should,” “expect,” “anticipate,” “estimate,”
“believe,” “intend” or “project,” the negative of these words, other
                variations on these words or comparable terminology. These forward-looking
                statements are based on assumptions that may be incorrect, and USOF
                cannot
                assure investors that these projections included in these forward-looking
                statements will come to pass. USOF's actual results could differ materially
                from those expressed or implied by the forward-looking statements
                as a result of
                various factors.
  USOF
                has
                based the forward-looking statements included in this annual report
                on Form 10-K
                on information available to it on the date of this annual report on Form
                10-K, and USOF assumes no obligation to update any such forward-looking
                statements. Although USOF undertakes no obligation to revise or update
                any
                forward-looking statements, whether as a result of new information,
                future
                events or otherwise, investors are advised to consult any additional
                disclosures
                that USOF may make directly to them or through reports that USOF in the
                future files with the SEC, including annual reports on Form 10-K, quarterly
                reports on Form 10-Q and current reports on Form 8-K.
 Introduction
 
 USOF,
                  a
                  Delaware limited partnership, is a commodity pool that issues units that
                  may be purchased and sold on the AMEX. The investment objective of USOF is
                  for changes in percentage terms of the units’ NAV on a daily basis to
                  reflect the changes in percentage terms in the spot price of light, sweet
                  crude oil delivered to Cushing, Oklahoma, also on a daily basis,
                  as measured by
                  the changes in the price of the futures contract on light, sweet
                  crude oil as
                  traded on the NYMEX that is the near month contract to expire, except when
                  the near month contract is within two weeks of expiration, in which
                  case the
                  futures contract will be the next month contract to expire, less
                  USOF’s
                  expenses.
 
 USOF
                  seeks to achieve its investment objective by investing in a combination
                  of Oil
                  Futures Contracts and Other Oil Interests such that changes in
                  USOF’s NAV,
                  measured in percentage terms, will closely track the changes in
                  the price
                  of the Benchmark Oil Futures Contract, also measured in percentage
                  terms. USOF’s
                  General Partner believes the Benchmark Oil Futures Contract historically
                  has exhibited a close correlation with the spot price of light, sweet
                  crude
                  oil. It is not the intent of USOF to be operated in a fashion such
                  that the NAV
                  will equal, in dollar terms, the spot price of light, sweet crude
                  oil or any
                  particular futures contract based on light, sweet crude oil. Management
                  believes
                  that it is not practical to manage the portfolio to achieve such
                  an investment
                  goal when investing in listed crude oil futures contracts.
 At
                  present, on any valuation day the Benchmark Oil Futures Contract
                  is the near
                  month futures contract for light, sweet crude oil traded on the NYMEX
                  unless the near month contract will expire within two weeks of
                  the valuation
                  day, in which case the Benchmark Oil Futures Contract is the next
                  month contract
                  for light, sweet crude oil traded on the NYMEX. “Near month contract” means the
                  next contract traded on the NYMEX due to expire;
“next
                  month contract” means the first contract traded on the NYMEX due to expire after
                  the near month contract.
  USOF
                    may
                    also invest in Oil Futures Contracts and Other Oil Interests. The General
                    Partner of USOF is registered as a CPO with the CFTC and is authorized
                    by
                    the LP Agreement to manage USOF. The General Partner is authorized
                    by USOF
                    in its sole judgment to employ, establish the terms of employment
                    for and
                    terminate commodity trading advisors or futures commission
                    merchants.
 51
 Valuation
                of Crude Oil Futures
                Contracts and the Computation of the NAV
 The
                  NAV
                  of USOF units is calculated once each trading day as of the earlier
                  of the close
                  of the NYSE or 4:00 p.m.
                  New York time. The NAV for a particular trading day is released after
                  4:15 p.m. New York time. Trading
                  on the AMEX typically closes at 4:15 p.m. New York time. USOF uses the
                  NYMEX closing price (determined at the earlier of the close of
                  the NYMEX or
                  2:30 p.m. New York time) for the contracts held on the NYMEX, but
                  calculates or determines the value of all other USOF investments,
                  including ICE
                  Futures or other futures contracts, as of the earlier of the close of
                  the NYSE or 4:00 p.m. New York time.
  Management’s
                  Discussion of Results of
                  Operation and the Crude Oil Market
 
 Results
                  of
                  Operations. On April 10, 2006, USOF listed its units on the
                  AMEX under the ticker symbol “USO.” On that day USOF established its initial
                  offering price at $67.39 per unit and issued 200,000 units to the
                  initial
                  Authorized Purchaser, KV Execution Services LLC, in exchange for
                  $13,478,000 in
                  cash.
  Since
                  its
                  initial offering of 17,000,000 units, USOF has made four subsequent
                  offerings of
                  its units: 30,000,000 units which were registered with the SEC on October
                  18, 2006, 50,000,000 units which were registered with the SEC on January
                  30, 2007, 30,000,000 units which were registered with the SEC on
                  December 4, 2007 and an additional 100,000,000 units which were registered
                  with the SEC on January 24, 2008. Units offered by USOF in subsequent
                  offerings
                  were sold by it for cash at the units' NAV as described in the
                  applicable
                  prospectus. As of December 31, 2007, USOF had issued 107,400,000
                  units, 19,600,000 of which were remaining and 6,400,000 of which were
                  outstanding.
  More
                  units have been issued than are outstanding due to the redemption
                  of units as
                  contemplated and permitted under the LP Agreement. Unlike funds
                  that are
                  registered under the 1940 Act, units that have been redeemed by
                  USOF cannot be
                  resold by USOF without registration of their offering with the
                  SEC. As a result,
                  USOF contemplates that further offerings of its units will be
                  registered with the SEC in the future in anticipation of additional
                  issuances.
  As
                  of
                  December 31, 2007, the total unrealized gain on crude oil futures contracts
                  owned or held on that day was $35,705,020 and USOF established cash
                  deposits that were equal to $187,445,274. The majority of those
                  cash assets were
                  held in overnight deposits at USOF’s Custodian, while less
                  than
                  10% of the cash balance was held as margin deposits with the
                  futures
                  commission merchant for the Oil Futures Contracts purchased. The
                  ending per unit
                  NAV on December 31, 2007 was $75.82.
 
 Portfolio
                  Expenses .
                  USOF’s
                  expenses consist of investment management fees, brokerage fees and
                  commissions, certain offering costs, licensing fees and the fees
                  and expenses of
                  the independent directors of the General Partner. The management fee that
                  USOF pays to the General Partner is calculated as a percentage
                  of the total net
                  assets of USOF. For total net assets of up to $1 billion, the management
                  fee is
                  0.5%. For total net assets over $1 billion, the management fee
                  is 0.2% on the
                  incremental amount of assets.
  During
                      the period from April 10, 2006 to December 31, 2006, the daily
                      average total net
                      assets of USOF were approximately $400,799,633. At no time during 2006
                      did
                      the total net assets of USOF exceed $1 billion. The management
                      fee paid by USOF
                      amounted to $1,460,448, which was calculated at the 0.50% rate
                      and accrued
                      daily. Management expenses as a percentage of total net assets
                      average 0.50%
                      over the course of the period.
 During
                  the year ended December 31, 2007, the daily average total net assets
                  of USOF were $732,683,031.  During the year ended December 31,
                  2007, total net assets of USOF did exceed $1 billion on a number of
                  days. The management fee paid by USOF amounted to $3,622,613, which was
                  calculated at the 0.50% rate for the total net assets up to and
                  including $1
                  billion and at the rate of 0.20% on total net assets over $1 billion,
                  and
                  accrued daily. Management expenses as a percentage of total net
                  assets averaged
                  0.50% over the course of the period.
  USOF pays
                  for all brokerage fees, taxes and other expenses, including licensing
                  fees for
                  the use of intellectual property, ongoing registration or other
                  fees paid to the
                  SEC, FINRA and any other regulatory agency in connection
                  with offers and sales of its units subsequent to the initial offering
                  and
                  all legal, accounting, printing and other expenses associated
                  therewith. For the year ended December 31, 2007, USOF incurred
                  $437,974 in ongoing registration fees and other offering expenses.
                  USOF is
                  responsible for paying the fees and expenses, including directors'
                  and officers' liability insurance, of the independent directors of
                  the
                  General Partner who are also audit committee members. USOF shares
                  these fees with USNG and US12OF based on the relative assets of each
                  fund computed on a daily basis. These fees for calendar year 2007
                  amounted to a
                  total of $286,000 for all three funds.
 Expenses
                      incurred from inception through December 31, 2006 in connection
                      with organizing
                      USOF and the costs of the initial offering of units were borne by the
                      General Partner, and are not subject to reimbursement by
                      USOF.
  USOF
                  also
                  incurs commissions to brokers for the purchase and sale of Oil
                  Futures
                  Contracts, Other Oil Interests or Treasuries. During
                  the period from April 10, 2006 to December 31, 2006, total commissions
                  paid
                  amounted to $478,713. As an annualized percentage of total net assets, the
                  actual figure for 2006 represents approximately 0.16% of total
                  net assets.During 2007, total commissions paid amounted to $1,184,956.
                  Prior to the
                  initial offering of its units, USOF had estimated that its annual
                  level of such
                  commissions was expected to be 0.35%
                  of total net assets. As an annualized percentage of total net assets,
                  the figure for 2007 represents approximately 0.16%
                  of total net assets. However, there can be no assurance that commission
                  costs
                  and portfolio turnover will not cause commission expenses to rise
                  in future
                  quarters.
 Interest
                    Income .
                    USOF
                    seeks to invest its assets such that it holds Oil Futures Contracts and
                    Other Oil Interests in an amount equal to the total net assets
                    of the portfolio.
                    Typically, such investments do not require USOF to pay the full
                    amount of the
                    contract value at the time of purchase, but rather require USOF
                    to post an
                    amount as a margin deposit against the eventual settlement of
                    the contract. As a
                    result, USOF retains an amount that is approximately equal to
                    its total net
                    assets, which USOF invests in Treasuries, cash and/or cash equivalents.
                    This includes both the amount on deposit with the futures commission
                    merchant as
                    margin, as well as unrestricted cash held with USOF’s Custodian. The Treasuries,
                    cash and/or cash equivalents earn interest that accrues on a
                    daily basis. For
                    2006,
                    USOF earned $13,930,431 in interest income on such cash holdings.
                    Based on
                    USOF’s average daily total net assets, this is equivalent to an annualized
                    yield
                    of 4.77%. USOF did not purchase Treasuries during 2006 and held all of its
                    funds in cash and/or cash equivalents during this time period.For 2007,
                    USOF earned $34,845,846 in interest income on such cash holdings.
                    Based on
                    USOF’s average daily total net assets, this is equivalent to an annualized
                    yield
                    of 4.76%. USOF did not purchase Treasuries during 2007 and held all of its
                    funds in cash and/or cash equivalents during this time
                    period.
 52
 Tracking
                  USOF’s
                  Benchmark .
                  USOF
                  seeks to manage its portfolio such that changes in its average
                  daily NAV, on a
                  percentage basis, closely track changes in the average daily price
                  of the
                  Benchmark Oil Futures Contract, also on a percentage basis. Specifically,
                  USOF
                  seeks to manage the portfolio such that over any rolling period
                  of 30 valuation
                  days, the average daily change in the NAV is within a range of
                  90% to 110% (0.9
                  to 1.1), of the average daily change of the Benchmark Oil Futures
                  Contract. As
                  an example, if the average daily movement of the Benchmark Oil
                  Futures Contract
                  for a particular 30-day time period was 0.5% per day, USOF management
                  would
                  attempt to manage the portfolio such that the average daily movement
                  of the NAV
                  during that same time period fell between 0.45% and 0.55% ( i.e .,
                  between 0.9 and 1.1 of the benchmark’s results). USOF’s portfolio management
                  goals do not include trying to make the nominal price of USOF’s NAV equal to the
                  nominal price of the current Benchmark Oil Futures Contract or
                  the spot price
                  for crude oil. Management believes that it is not practical to
                  manage the
                  portfolio to achieve such an investment goal when investing in
                  listed crude oil
                  futures contracts.
 
 For
                  the
                  30 valuation days ended December 31, 2007, the simple average daily
                  change in
                  the Benchmark Oil Futures Contract was 0.166%, while the simple
                  average daily
                  change in the NAV of USOF over the same time period was 0.176%.
                  The average
                  daily difference was 0.01% (or 1.0 basis points, where 1 basis
                  point equals
                  1/100 of 1%). As a percentage of the daily movement of the Benchmark
                  Oil Futures
                  Contract, the average error in daily tracking by the NAV was 2.462%,
                  meaning
                  that over this time period USOF’s tracking error was within the plus or minus
                  10% range established as its benchmark tracking goal.
  
 
 53
 Since
                  the
                  offering of USOF units to the public on April 10, 2006 to December 31,
                  2007, the simple average daily change in the Benchmark Oil Futures
                  Contract was
                  -0.031%, while the simple average daily change in the NAV of USOF
                  over the same
                  time period was 0.042%. The average daily difference was 0.011%
                  (or 1.1 basis
                  point, where 1 basis point equals 1/100 of 1%). As a percentage
                  of the daily
                  movement of the Benchmark Oil Futures Contract, the average error
                  in daily
                  tracking by the NAV was 2.98%, meaning that over this time period
                  USOF’s
                  tracking error was within the plus or minus 10% range established
                  as its
                  benchmark tracking goal.
 
 An
                  alternative tracking measurement of the return performance of USOF
                  versus the
                  return of its Benchmark Oil Futures Contract can be calculated
                  by comparing the
                  actual return of USOF, measured by changes in its NAV, versus the expected changes
                  in its NAV under the assumption that USOF’s returns had been exactly the same as
                  the daily changes in its Benchmark Oil Futures Contract.
 
 For
                  the
                  year ended December 31, 2007, the actual total return of USOF as measured
                  by changes in its NAV was 46.17%. This is based on initial NAV of $51.87 on
                  January 2, 2007 and an ending NAV as of December 31, 2007 of $75.82.
                  During this time period, USOF made no distributions to its unitholders.
                  However,
                  if USOF’s daily changes in its NAV had instead exactly tracked the changes
                  in
                  the daily return of the Benchmark Oil Futures Contract, USOF would
                  have ended
                  2007 with an estimated NAV of $73.01, for a total return over the
                  relevant time
                  period of 40.75%.The difference between the actual NAV
                  total return of USOF of 46.17% and the expected total return based
                  on the
                  Benchmark Oil Futures Contract of 40.75% was an error over the
                  time period of
                  +5.42%, which is to say that USOF’s actual total return exceeded the benchmark
                  result by that percentage. Management believes that a portion of the
                  difference between the actual return and the expected benchmark
                  return can be
                  attributed to the impact of the interest that USOF collects on
                  its cash and cash
                  equivalent holdings. In addition, during the year ended December
                  31, 2007, USOF
                  also collected fees from brokerage firms creating or redeeming
                  baskets of units.
                  This income also contributed to USOF’s actual return exceeding the benchmark
                  results. However, if the total assets of USOF continue to increase,
                  management
                  believes that the impact on total returns of these fees from creations
                  and
                  redemptions will diminish as a percentage of the total return.
  For
                    the
                    period April 10, 2006 through December 31, 2006, the actual total
                    return of USOF
                    as measured by changes in its NAV was -23.03%. This is based
                    on initial
                    NAV of $67.39 on April 10 and an ending NAV as of December 31 of
                    $51.87
                    (during this time period USOF made no distributions to its unitholders).
                    However, if USOF’s daily changes in its NAV had instead exactly tracked the
                    changes in the daily return of the Benchmark Oil Futures Contracts,
                    USOF would
                    have ended 2006 with an estimated NAV of $50.61, for a total
                    return over the
                    relevant time period of -24.90%. The difference between the actual
                    NAV total
                    return of USOF of -23.03% and the expected total return based
                    on the Benchmark
                    Oil Futures Contracts of -24.90 % was an error over the time
                    period of +1.87%,
                    which is to say that USOF’s actual total return exceeded the benchmark result by
                    that percentage. Management believes that the majority of the
                    difference between
                    the actual return and the expected benchmark return can be attributed
                    to the
                    impact of the interest that USOF collects on its cash and cash
                    equivalent
                    holdings. In addition, during the period USOF also collected
                    fees from brokerage
                    firms creating or redeeming baskets of units. This income also
                    contributed to
                    USOF’s actual return exceeding the benchmark results. However, if
                    the total
                    assets of USOF continue to increase, management believes that
                    the impact on
                    total returns of these fees from creations and redemptions will
                    diminish as a
                    percentage of the total return.
  There
                  are
                  currently three factors that have impacted, during the latest period,
                  or are
                  most likely to impact, USOF’s ability to accurately track its
                  Benchmark Oil Futures Contract.
 
 First,
                  USOF may buy or sell its holdings in the then current Benchmark
                  Oil Futures
                  Contract at a price other than the closing settlement price of
                  that contract on
                  the day in which USOF executes the trade. In that case, USOF may
                  get a price
                  that is higher, or lower, than that of the Benchmark Oil Futures
                  Contract,
                  which, could cause the changes in the daily NAV of USOF to either be too
                  high or too low relative to the changes in the daily benchmark.
                  In 2007,
                  management attempted to minimize the effect of these transactions
                  by seeking to
                  execute its purchase or sales of the Benchmark Oil Futures Contracts
                  at, or as
                  close as possible to, the end of the day settlement price. However,
                  it may not
                  always be possible for USOF to obtain the closing settlement price
                  and there is
                  no assurance that failure to obtain the closing settlement price
                  in the future
                  will not adversely impact USOF’s attempt to track its benchmark over
                  time.
  Second,
                    USOF earns interest on its cash, cash equivalents and Treasury
                    holdings. USOF is not required to distribute any portion of its
                    income to its
                    unitholders and did not make any distribution to unitholders
                    in 2007. Interest
                    payments, and any other income, were retained within the portfolio
                    and added to
                    USOF’s NAV. When this income exceeds the level of USOF’s expenses for its
                    management fee, brokerage commissions and other expenses (including
                    ongoing
                    registration fees, licensing fees and the fees and expenses of the
                    independent directors of the General Partner), USOF will realize
                    a net yield
                    that will tend to cause daily changes in the NAV of USOF to track
                    slightly
                    higher than daily changes in the Benchmark Oil Futures Contracts.
                    During 2007,
                    USOF earned, on an annualized basis, approximately 4.76% on its
                    cash holdings.
                    It also incurred cash expenses on an annualized basis of 0.50%
                    for management
                    fees and approximately 0.16% in brokerage commission costs related
                    to the
                    purchase and sale of futures contracts, and 0.21% for other expenses.
                    The
                    foregoing fees and expenses resulted in a net yield on an annualized
                    basis of
                    approximately 3.89% and affected USOF’s ability to track its benchmark. If
                    short-term interest rates rise above the current levels, the
                    level of deviation
                    created by the yield would increase. Conversely, if short-term
                    interest rates
                    were to decline, the amount of error created by the yield would
                    decrease. If
                    short-term yields drop to a level lower than the combined expenses
                    of the
                    management fee and the brokerage commissions, then the tracking
                    error would
                    become a negative number and would tend to cause the daily returns
                    of the NAV to
                    underperform the daily returns of the Benchmark Oil Futures
                    Contract.
  Third,
                      USOF may hold Other Oil Interests in its portfolio that may fail
                      to closely
                      track the Benchmark Oil Futures Contract's total return movements.
                      In that case,
                      the error in tracking the benchmark could result in daily changes
                      in the NAV of
                      USOF that are either too high, or too low, relative to the
                      daily changes in the
                      benchmark. During 2007, USOF did not hold any Other Oil Interests. However,
                      there can be no assurance that in future quarters USOF will
                      not make use of such
                      Other Oil Interests.
  During
                      the year ended December 31, 2007, the prices
                      of front month futures contracts rose from near the $58.00
                      level to
                      approximately the $95.00 level. The prices of front month contracts
                      were
                      lower than the price of second or third month contracts for the first
                      six
                      months of this time period. The prices of front month contracts
                      were higher than
                      the price of second or third month contracts for most of the
                      second six months
                      of this time period.
 54
 Term
                  Structure of Crude Oil Futures
                  Prices and the Impact on Total Returns.Several factors determine the
                  total return from investing in a futures contract position. One
                  factor that
                  impacts the total return that will result from investing in near month
                  crude oil futures contracts and “rolling” those contracts forward each month is
                  the price relationship between the current near month contract
                  and the later
                  month contracts. For example, if the price of the near month contract
                  is higher
                  than the next month contract (a situation referred to as “backwardation” in the
                  futures market), then absent any other change there is a tendency
                  for the price
                  of a next month contract to rise in value as it becomes the near
                  month contract
                  and approaches expiration. Conversely, if the price of a near month
                  contract is
                  lower than the next month contract (a situation referred to as
“contango” in the
                  futures market), then absent any other change there is a tendency
                  for the price
                  of a next month contract to decline in value as it becomes the
                  near month
                  contract and approaches expiration.
  As
                    an
                    example, assume that the price of crude oil for immediate delivery
                    (the “spot”
price), was $50 per barrel, and the value of a position in the
                    near month
                    futures contract was also $50. Over time, the price of the barrel
                    of crude oil
                    will fluctuate based on a number of market factors, including demand for
                    oil relative to its supply. The value of the near month contract
                    will likewise
                    fluctuate in reaction to a number of market factors. If investors seek
                    to
                    maintain their holding in a near month contract position and
                    not take delivery
                    of the oil, every month they must sell their current near month
                    contract as it
                    approaches expiration and invest in the next month contract.
 
 If
                    the
                    futures market is in backwardation, e.g., when the expected price
                    of oil in the
                    future would be less, the investor would be buying a next month
                    contract for a
                    lower price than the current near month contract. Hypothetically,
                    and assuming
                    no other changes to either prevailing crude oil prices or the
                    price relationship
                    between the spot price, the near month contract and the next
                    month contract (and
                    ignoring the impact of commission costs and the interest earned
                    on Treasuries,
                    cash and/or cash equivalents), the value of the next month contract
                    would rise
                    as it approaches expiration and becomes the new near month contract.
                    In this
                    example, the value of the $50 investment would tend to rise faster
                    than the spot
                    price of crude oil, or fall slower. As a result, it would be
                    possible in this
                    hypothetical example for the price of spot crude oil to have
                    risen to $60 after
                    some period of time, while the value of the investment in the
                    futures contract
                    would have risen to $65, assuming backwardation is large enough
                    or enough time
                    has elapsed. Similarly, the spot price of crude oil could have
                    fallen to $40
                    while the value of an investment in the futures contract could
                    have fallen to
                    only $45. Over time, if backwardation remained constant, the
                    difference would
                    continue to increase.
 
 If
                    the
                    futures market is in contango, the investor would be buying a
                    next month
                    contract for a higher price than the current near month contract.
                    Hypothetically, and assuming no other changes to either prevailing
                    crude oil
                    prices or the price relationship between the spot price, the
                    near month contract
                    and the next month contract (and ignoring the impact of commission
                    costs and the
                    interest earned on cash), the value of the next month contract
                    would fall as it
                    approaches expiration and becomes the new near month contract.
                    In this example,
                    it would mean that the value of the $50 investment would tend
                    to rise slower
                    than the spot price of crude oil, or fall faster. As a result,
                    it would be
                    possible in this hypothetical example for the spot price of crude oil to
                    have risen to $60 after some period of time, while the value
                    of the investment
                    in the futures contract will have risen to only $55, assuming
                    contango is large
                    enough or enough time has elapsed. Similarly, the spot price
                    of crude oil could
                    have fallen to $45 while the value of an investment in the futures
                    contract
                    could have fallen to $40. Over time, if contango remained constant,
                    the
                    difference would continue to increase.
 Historically,
                      the oil futures markets have experienced periods of contango and
                      backwardation, with backwardation being in place more often
                      than contango.
                      During the past two years, including 2006 and the first half
                      of 2007, these
                      markets have experienced contango. However, starting early
                      in the third quarter
                      of 2007, the crude oil futures market moved into backwardation
                      and remained in
                      that condition for the rest of the year. The chart below compares
                      the price of
                      the front month contract to the average price of the first
                      12 months over the
                      last 10 years (1998-2007). When the price of the front month
                      contract is higher
                      than the average price of the front 12 month contracts, the
                      market would be
                      described as being in backwardation. When the price of the
                      front month contract
                      is lower than the average price of the front 12 month contracts,
                      the market
                      would be described as being in contango. Although the prices
                      of the front month
                      contract and the average price of the front 12 month contracts
                      do tend to move
                      up or down together, it can be seen that at times the front
                      month prices are
                      clearly higher than the average price of the 12 month contracts
                      (backwardation),
                      and other times they are below the average price of the front
                      12 month contracts
                      (contango).
  Front Month Price vs. Average
 55
 An
                        alternative way to view the same data is to subtract the
                        dollar price of the
                        front month contract from the average dollar price of the
                        front 12 month
                        contracts. If the resulting number is a positive number,
                        than the front month
                        price is higher than the average price of the front 12 months
                        and the market
                        could be described as being in backwardation. If the resulting
                        number is a
                        negative number, than the front month price is lower than
                        the average price of
                        the front 12 months and the market could be described as
                        being in contango. The
                        chart below shows the results from subtracting the front
                        month price from the
                        average price of the front 12 month contracts for the 10
                        year period between
                        1998 and 2007.
 A
                    hypothetical investment in a portfolio that involved owning only
                    the front month
                    contract would produce a different result than a hypothetical
                    investment in a
                    portfolio that owned an equal number of each of the front 12
                    month’s worth of
                    contracts. Generally speaking, when the crude oil futures market
                    is in
                    backwardation, the front month only portfolio would tend to have
                    a higher total
                    return than the 12 month portfolio. Conversely, if the crude
                    oil futures market
                    was in contango, the portfolio containing 12 months worth of
                    contracts would
                    tend to outperform the front month only portfolio. The chart
                    below shows the
                    hypothetical results of owning a portfolio consisting of the
                    front month
                    contract versus a portfolio containing the front 12 month’s worth of contracts.
                    In this example, each month the front month only portfolio would
                    sell the front
                    month contract at expiration and buy the next month out contract.
                    The portfolio
                    holding an equal number of the front 12 month’s worth of contracts would sell
                    the front month contract at expiration and replace it with the
                    contract that
                    becomes the new twelfth month contract.
  As
                    seen
                    in the chart, there have been periods of both positive and negative
                    annual total
                    returns for both hypothetical portfolios over the last 10 years.
                    In addition,
                    there have been periods during which the front month only approach
                    had higher
                    returns, and periods where the 12 month approach had higher total
                    returns.
 
 Historically,
                    the oil futures markets have experienced periods of contango and
                    backwardation, with backwardation being in place more often than
                    contango.
                    During the past two years, including 2006 and the first half
                    of 2007, these
                    markets have experienced contango. However, starting early in
                    the third quarter
                    of 2007 the crude oil futures market moved into backwardation.
                    While the
                    investment objective of USOF is not to have the market price
                    of its units match,
                    dollar for dollar, changes in the spot price of oil, contango
                    and backwardation
                    have impacted the total return on an investment in USOF units
                    during the past
                    year relative to a hypothetical direct investment in crude oil. For
                    example, an investment made in USOF units made during the second
                    quarter of
                    2007,  a period of contango in the crude oil markets, decreased by
                    -0.71%, while the spot price of crude oil for immediate delivery
                    during the same
                    period increased by 7.30%. Conversely, an investment made in USOF units
                    during the third quarter of 2007, a period in which the crude
                    oil futures market
                    was mostly in backwardation, increased by 17.82% while the spot
                    price of crude
                    oil increased by 15.53% (note: these comparisons ignore the potential
                    costs
                    associated with physically owning and storing crude oil which
                    could be
                    substantial).
 
 These
                    periods of contango or backwardation do not meaningfully impact
                    USOF’s
                    investment objective of having percentage changes in its per
                    unit NAV track
                    percentage changes in the price of the Benchmark Oil Futures
                    Contract since the
                    impact of backwardation and contango tended to equally impact
                    the percentage
                    changes in price of both USOF’s units and the Benchmark Oil Futures
                    Contract. It is impossible to predict with any degree of certainty
                    whether
                    backwardation or contango will occur in the future. It is likely
                    that both
                    conditions will occur during different periods.
 56
 Crude
                        oil
                        market. During the year ended December 31, 2007, crude oil
                        prices were
                        impacted by several factors. On the consumption side, demand
                        remained strong as
                        continued global economic growth, especially in emerging
                        economies such as China
                        and India, remained brisk. Additionally, a falling U.S. dollar,
                        the currency in
                        which crude oil is traded globally, continued to be weak,
                        effectively making
                        crude oil cheaper for most non-U.S. dolar economies. On the supply
                        side, production remained steady despite concerns about violence impacting
                        production in Iraq and Nigeria. At the same time, a concern remains about
                        the ability of major oil producing countries to continue to raise
                        their
                        production to accommodate increasing demand. Additionally,
                        a concern about the
                        strength of the U.S. economy, and the risk of recession which
                        might lead to the
                        U.S. decreasing its oil consumption in 2008, began to be
                        a factor in the crude
                        oil markets very late in 2007.
  Critical
                      Accounting
                      Policies
 
 Preparation
                      of the condensed financial statements and related disclosures
                      in compliance with
                      accounting principles generally accepted in the United States
                      of America
                      requires the application of appropriate accounting rules and
                      guidance, as well
                      as the use of estimates. USOF's application of these policies
                      involves judgments
                      and actual results may differ from the estimates used.
  The
                      General Partner has evaluated the nature and types of estimates
                      that
                      it makes in preparing USOF's condensed financial statements and
                      related
                      disclosures and has determined that the valuation of its investments which
                      are not traded on a United States or internationally recognized
                      futures exchange
                      (such as forward contracts and over-the-counter contracts)
                      involves a critical
                      accounting policy. To the extent USOF makes such investments,
                      the values used by
                      USOF for its forward contracts will be provided by its commodity
                      broker who
                      values over-the-counter contracts based on the present value of estimated
                      future cash flows that would be received from or paid to a
                      third party in
                      settlement of these derivative contracts prior to their delivery
                      date and valued
                      on a daily basis. In addition, USOF estimates interest income
                      on a daily basis
                      using prevailing interest rates earned on its cash and cash
                      equivalents. These
                      estimates are adjusted to the actual amount received on a monthly
                      basis and the
                      difference, if any, is not considered material.
  Liquidity
                    and Capital Resources
 
 USOF
                    has
                    not made, and does not anticipate making, use of borrowings or
                    other lines of
                    credit to meet its obligations. USOF has met, and it is anticipated
                    that USOF
                    will continue to meet, its liquidity needs in the normal course
                    of business from
                    the proceeds of the sale of its investments, or from the Treasuries,
                    cash and/or
                    cash equivalents that it intends to hold at all times. USOF’s liquidity needs
                    include: redeeming units, providing margin deposits for its existing
                    Oil Futures
                    Contracts or the purchase of additional crude oil futures contracts
                    and posting
                    collateral for its over-the-counter contracts and payment of
                    its expenses,
                    summarized below under “Contractual Obligations.”
 
 USOF
                    currently generates cash primarily from (i) the sale of Creation
                    Baskets and
                    (ii) interest earned on Treasuries, cash and/or cash equivalents.
                    USOF has
                    allocated substantially all of its nets assets to trading in
                    oil interests. A
                    significant portion of the NAV was held in Treasuries, cash and/or
                    cash
                    equivalents that were used as margin for USOF's trading in oil
                    interests. Treasuries, cash and/or cash equivalents as a percentage of
                    the total net assets vary from period to period as the market
                    values of the oil
                    interests change. The balance of the net assets is held in USOF's
                    Oil Futures
                    Contracts and Other Oil Interests trading account. Interest earned
                    on USOF's
                    interest bearing-funds is paid to USOF.
  USOF's
                  investment in oil interests may be subject to periods of illiquidity
                  because of
                  market conditions, regulatory considerations and other reasons.
                  For example,
                  commodity exchanges limit the fluctuations in Oil Futures Contracts
                  prices
                  during a single day by regulations referred to as “daily limits.” During a
                  single day, no trades may be executed at prices beyond the daily
                  limit. Once the
                  price of an Oil Futures Contract has increased or decreased by
                  an amount equal
                  to the daily limit, positions in the contracts can neither be taken
                  or
                  liquidated unless the traders are willing to effect trades at or
                  within the
                  specified daily limit. Such market conditions could prevent USOF
                  from promptly
                  liquidating its positions in Oil Futures Contracts. During 2007,
                  USOF was not
                  forced to purchase or liquidate any of its positions while daily
                  limits were in
                  effect; however, USOF cannot predict whether such an event may
                  occur in the
                  future.
  Prior
                  to
                  March 23, 2007, all payments with respect to USOF's and the General
                  Partner's
                  expenses were paid by their affiliates. Neither USOF nor the General
                  Partner has
                  any obligation or intention to refund such payments by their affiliates.
                  These
                  affiliates are under no obligation to pay USOF's or the General
                  Partner's
                  current or future expenses. If the General Partner and USOF are
                  unsuccessful in raising sufficient funds to cover USOF's expenses
                  or in locating
                  any other source of funding, USOF will terminate and investors
                  may lose all or
                  part of their investment.
  Market
                  Risk
 
 Trading
                  in Oil Futures Contracts and Other Oil Interests, such as
                  forwards, involves USOF entering into contractual commitments to purchase
                  or sell oil at a specified date in the future. The gross or face
                  amount of
                  the contracts will significantly exceed USOF's future cash requirements
                  since USOF intends to close out its open positions prior to settlement.
                  As a
                  result, USOF is generally only subject to the risk of loss arising
                  from the change in value of the contracts. USOF considers the "fair
                  value'' of
                  its derivative instruments to be the unrealized gain or loss on
                  the contracts.
                  The market risk associated with USOF's commitments to purchase
                  oil is limited to
                  the gross face amount of the contacts held. However, should USOF
                  enter into a
                  contractual commitment to sell oil, it would be required to make
                  delivery of the
                  oil at the contract price, repurchase the contract at prevailing
                  prices or
                  settle in cash. Since there are no limits on the future price of
                  oil, the market
                  risk to USOF could be unlimited.
  USOF's
                  exposure to market risk depends on a number of factors, including the
                  markets for oil, the volatility of interest rates and foreign exchange
                  rates,
                  the liquidity of the Oil Futures Contracts and Other Oil Interests
                  markets and
                  the relationships among the contracts held by USOF. The limited
                  experience that
                  USOF has in utilizing its model to trade in oil interests in a manner
                  intended to track the spot price of crude oil, as well as drastic
                  market
                  occurrences, could ultimately lead to the loss of all or substantially
                  all of an
                  investor’s capital.
 57
 
 Credit
                      Risk
 
 When
                      USOF
                      enters into Oil Futures Contracts and Other Oil Interests,
                      it is exposed to the
                      credit risk that the counterparty will not be able to meet
                      its obligations. The
                      counterparty for the Oil Futures Contracts traded on the NYMEX
                      and on most
                      other foreign f utures
                      exchanges is the clearinghouse associated with the particular
                      exchange. In
                      general, clearinghouses are backed by their members who may
                      be required to share
                      in the financial burden resulting from the nonperformance of
                      one of their
                      members, and therefore, this additional member support should
                      significantly
                      reduce credit risk. Some foreign exchanges are not backed by
                      their clearinghouse
                      members but may be backed by a consortium of banks or other
                      financial
                      institutions.
  There
                      can
                      be no assurance that any counterparty, clearinghouse, or their
                      members or their
                      financial backers will satisfy their obligations to USOF in
                      such circumstances.
                      The General Partner attempts to manage the credit risk of USOF by following
                      various trading limitations and policies. In particular, USOF
                      posts margin
                      and/or holds liquid assets that are approximately equal to
                      the face amount of
                      its obligations to counterparties under the Oil Futures Contracts
                      and Other Oil
                      Interests it holds. The General Partner has implemented procedures
                      that include,
                      but are not limited to, executing and clearing trades only
                      with creditworthy
                      parties and/or requiring the posting of collateral or margin
                      by such parties for
                      the benefit of USOF to limit its credit exposure. UBS Securities
                      LLC, USOF's
                      commodity broker, or any other broker that may be retained
                      by USOF in the
                      future, when acting as USOF's futures commission merchant in
                      accepting orders to
                      purchase or sell Oil Futures Contracts on United States exchanges,
                      is required by CFTC regulations to separately account for and
                      segregate as belonging to USOF, all assets of USOF relating
                      to domestic Oil
                      Futures Contracts trading. A futures commission merchant is
                      not allowed to
                      commingle USOF's assets with its other assets. In addition,
                      the CFTC requires
                      commodity brokers to hold in a secure account the USOF assets
                      related to foreign
                      Oil Futures Contracts trading. During the year ended December
                      31, 2007, the
                      only foreign exchange on which USOF made investments was the
                      ICE Futures, which
                      is a London based futures exchange.  Those crude oil contracts are
                      denominated in U.S. dollars.
 
 Off
                      Balance Sheet
                      Financing
 
 As
                      of
                      December 31, 2007, USOF has no loan guarantee, credit support
                      or other
                      off-balance sheet arrangements of any kind other than agreements
                      entered into in
                      the normal course of business, which may include indemnification
                      provisions
                      relating to certain risks that service providers undertake
                      in performing
                      services which are in the best interests of USOF. While USOF's
                      exposure under
                      these indemnification provisions cannot be estimated, they
                      are not expected to
                      have a material impact on USOF's financial position.
 Redemption
                  Basket
                  Obligation
 
 In
                  order
                  to meet its investment objective and pay its contractual obligations
                  described
                  below, USOF requires liquidity to redeem units, which redemptions must be
                  in blocks of 100,000 units called Redemption Baskets. USOF has
                  to
                  date satisfied this obligation by paying from the cash or cash equivalents
                  it holds or through the sale of its Treasuries in an amount proportionate
                  to the number of units being redeemed.
  Contractual
                  Obligations
 
 USOF's
                  primary contractual obligations are with the General Partner. In
                  return for its
                  services, the General Partner is entitled to a management fee calculated
                  as a
                  fixed percentage of USOF's NAV, currently 0.50% for a NAV of $1
                  billion or less,
                  and thereafter 0.20% for a NAV above $1 billion. The General
                  Partner agreed to pay the start-up costs associated with the formation
                  of
                  USOF, primarily its legal, accounting and other costs in connection
                  with the General Partner's registration with the CFTC as a commodity
                  pool
                  operator and the registration and listing of USOF and its units
                  with
                  the SEC and the AMEX, respectively. However, the costs of registering
                  and
                  listing additional units of USOF with the SEC are directly borne
                  on an ongoing
                  basis by USOF, and not by the General Partner.
 
 The
                  General Partner pays the fees of the custodian and transfer agent,
                  BBH&Co., as well as BBH&Co.'s fees for performing administrative
                  services, including in connection with the preparation of USOF's condensed
                  financial statements and its SEC and CFTC reports. The General
                  Partner also
                  pays the fees of USOF's accountants and a separate firm for providing
                  tax
                  related services, as well as those of the Marketing Agent. The
                  General Partner
                  and USOF have also entered into a licensing agreement with the NYMEX
                  pursuant to which USOF and the affiliated funds managed by the
                  General
                  Partner pay a licensing fee to the NYMEX.
  In
                  addition to the General Partner's management fee, USOF pays its
                  brokerage fees
                  (including fees to a futures commission merchant), over-the-counter
                  dealer
                  spreads, any licensing fees for the use of intellectual property,
                  registration
                  and, subsequent to the initial offering, the fees paid to the SEC,
                  FINRA or any
                  other regulatory agency in connection with the offer and sale of
                  units, as well
                  as legal, printing, accounting and other expenses associated therewith, and
                  extraordinary expenses. The latter are expenses not incurred in the
                  ordinary course of USOF's business, including expenses relating to the
                  indemnification of any person against liabilities and obligations
                  to the extent
                  permitted by law and under the LP Agreement, the bringing or defending
                  of
                  actions in law or in equity or otherwise conducting litigation
                  and incurring
                  legal expenses and the settlement of claims and litigation. Commission
                  payments
                  to a futures commission merchant are on a contract-by-contract, or round
                  turn, basis. USOF also pays a portion of the fees and expenses
                  of the
                  independent directors of the General Partner. See Note 3 to the
                  Notes to
                  Condensed Financial Statements.
 
 The
                  parties cannot anticipate the amount of payments that will be required
                  under
                  these arrangements for future periods, as USOF's NAVs and trading
                  levels to meet
                  its investment objectives will not be known until a future date.
                  These
                  agreements are effective for a specific term agreed upon by the
                  parties and have
                  an option to renew, or, in some cases, are in effect for the duration
                  of USOF's
                  existence. Either party may terminate these agreements earlier
                  for certain
                  reasons described in the agreements.
 58
 Item
                    7A.  Quantitative
                    and Qualitative
                    Disclosure About Market Risk
  Over-the-Counter
                  Derivatives
                  (Including Spreads and Straddles)
 In
                    the
                    future, USOF may purchase over-the-counter contracts. Unlike
                    most of the
                    exchange-traded oil futures contracts or exchange-traded options
                    on such
                    futures, each party to over-the-counter contract bears the credit
                    risk that the
                    other party may not be able to perform its obligations under
                    its
                    contract.
  Some
                    oil-based derivatives transactions contain fairly generic terms
                    and conditions
                    and are available from a wide range of participants. Other oil-based
                    derivatives
                    have highly customized terms and conditions and are not as widely
                    available.
                    Many of these over-the-counter contracts are cash-settled forwards
                    for the
                    future delivery of oil- or petroleum-based fuels that have terms
                    similar to the
                    Oil Futures Contracts. Others take the form of “swaps” in which the two parties
                    exchange cash flows based on pre-determined formulas tied to
                    the spot price of
                    the crude oil, forward crude oil prices or crude oil futures prices. For
                    example, USOF may enter into over-the-counter derivative contracts
                    whose value
                    will be tied to changes in the difference between the spot price of light,
                    sweet crude oil, the price of Oil Futures Contracts traded on
                    NYMEX and the
                    prices of other Oil Futures Contracts that may be invested in
                    by
                    USOF.
  To
                    protect itself from the credit risk that arises in connection
                    with such
                    contracts, USOF may enter into agreements with each counterparty
                    that provide
                    for the netting of its overall exposure to its counterparty,
                    such as the
                    agreements published by the International Swaps and Derivatives
                    Association,
                    Inc. USOF also may require that the counterparty be highly rated and/or
                    provide collateral or other credit support to address USOF’s exposure to the
                    counterparty. In addition, it is also possible for USOF and its
                    counterparty to
                    agree to clear their agreement through an established futures
                    clearing house
                    such as those connected to the NYMEX or the ICE Futures. In that
                    event, USOF
                    would no longer have credit risk of its original counterparty,
                    as the clearing
                    house would now be USOF's counterparty. USOF would still retain
                    any price risk
                    associated with its transaction.
  USOF
                    may
                    employ spreads or straddles in its trading to mitigate the differences
                    in its
                    investment portfolio and its goal of tracking the price of the
                    Benchmark Oil
                    Futures Contract. USOF would use a spread when it chooses to
                    take simultaneous
                    long and short positions in futures written on the same underlying
                    asset, but
                    with different delivery months. The effect of holding such combined
                    positions is
                    to adjust the sensitivity of USOF to changes in the price relationship
                    between
                    futures contracts which will expire sooner and those that will
                    expire later.
                    USOF would use such a spread if the General Partner felt that
                    taking such long
                    and short positions, when combined with the rest of its holdings,
                    would more
                    closely track the investment goals of USOF, or the General Partner
                    felt if it
                    would lead to an overall lower cost of trading to achieve a given
                    level of
                    economic exposure to movements in oil prices. USOF would enter
                    into a straddle
                    when it chooses to take an option position consisting of a long
                    (or short)
                    position in both a call option and put option. The economic effect
                    of holding
                    certain combinations of put options and call options can be very
                    similar to that
                    of owning the underlying futures contracts. USOF would make use
                    of such a
                    straddle approach if, in the opinion of the General Partner,
                    the resulting
                    combination would more closely track the investment goals of
                    USOF or if it would
                    lead to an overall lower cost of trading to achieve a given level
                    of economic
                    exposure to movements in oil prices.
  During
                      the year ended December 31, 2007, USOF did not employ any hedging
                      methods since
                      all of its investments were made over an exchange. Therefore,
                      USOF was not
                      exposed to counterparty risk.
 59
 Item 8.
                      Financial
                          Statements and
                          Supplementary Data.
 Index
                    to Financial
                    Statements
  Documents
                          
                          PageReport
                              of Independent Registered Public Accounting
                              Firm
                          
                          
                          61Statements
                              of Financial Condition at December 31, 2007,
                              2006 and 2005
                          
                          
                          62Schedule
                            of Investments at December 31, 2007 and
                            2006
                          
                          
                          63Statements
                              of Operations for the year ended December 31,
                              2007, the period from April 10, 2006 (commencement
                              of operations)
                              to December 31, 2006 and the period from May 12, 2005
                              (inception) to
                              December 31, 2005
                          
                          
                          64Statements
                            of Changes in Partners' Capital for the year
                            ended December 31, 2007, the period from April 10, 2006
                            (commencement of
                            operations) to December 31, 2006 and the period from
                            May 12, 2005
                            (inception) to December 31, 2005
                          
                          
                          65Statements
                              of Cash Flows for the year ended December 31,
                              2007, the period from April 10, 2006 (commencement of operations)
                              to December 31, 2006 and the period from May 12, 2005
                              (inception) to December 31, 2005
                          
                          
                          66Notes
                              to Financial Statements
                          
                          
                          67
 60
 
 Reportof Independent Registered Public Accounting
                    Firm
 
 To
                    the
                    Partners of
 United
                      States Oil Fund, LP
  We
                        have
                        audited the accompanying statements of financial condition
                        of United
                        States Oil Fund, LP, (the “Fund”) as of December 31, 2007,
                        2006 and 2005, including the schedule of investments as of December
                        31, 2007 and 2006, and the related statements of operations,
                        changes in
                        partners’ capital and cash flows for the year ended December 31, 2007, the
                        period from April 10, 2006 (commencement of operations) through
                        December 31,
                        2006 and the period from May 12, 2005 (inception) to December
                        31, 2005. These
                        financial statements are the responsibility of the Fund’s management. Our
                        responsibility is to express an opinion on these financial
                        statements based on
                        our audits.
 
 We
                        conducted our audits in accordance with standards of the
                        Public Company
                        Accounting Oversight Board (United States). Those standards
                        require that we plan
                        and perform the audits to obtain reasonable assurance about
                        whether the
                        financial statements are free of material misstatement. An
                        audit includes
                        examining, on a test basis, evidence supporting the amounts
                        and disclosures in
                        the financial statements. An audit also includes assessing
                        the accounting
                        principles used and significant estimates made by management,
                        as well as
                        evaluating the overall financial statement presentation.
                        We believe that our
                        audits provide a reasonable basis for our opinion.
 
 In
                        our
                        opinion, the financial statements referred to above present
                        fairly, in all
                        material respects, the financial position of United States Oil Fund,
                        LP as of December 31, 2007, 2006 and 2005, and the results of its
                        operations and its cash flows for the year ended December
                        31, 2007, the
                        period from April 10, 2006 (commencement of operations) through
                        December 31,
                        2006 and the period from May 12, 2005 (inception) through
                        December 31,
                        2005, in conformity with accounting principles generally accepted
                        in the
                        United States of America.
  We
                        also
                        have audited, in accordance with standards of the Public
                        Company Accounting
                        Oversight Board (United States), the Fund's internal control
                        over financial
                        reporting as of December 31, 2007, based on criteria established
                        in Internal
                        Control — Integrated Framework issued by the Committee of Sponsoring
                        Organizations of the Treadway Commission and our report dated
                        March 1, 2008
                        expressed an unqualified opinion on the Fund's internal control
                        over financial
                        reporting.
 /s/ SPICER
                      JEFFRIES
                      LLP
  Greenwood
                      Village, Colorado
 March
                      1 ,
                      2008
 61
 United
                              States Oil Fund, LPStatements
                              of Financial
                              ConditionAt
                              December 31, 2007,
                              2006 and 20052007
                          
                          
                          2006
                          
                          2005AssetsCash
                              and cash equivalents
                          
                          $
                          354,816,049
                          
                          $
                          712,883,812
                          
                          $
                          1,000Equity
                              in UBS Securities LLC trading accounts:Cash
                          
                          
                          86,330,750
                          
                          
                          87,123,636
                          
                          
                          -Unrealized
                              gain (loss) on open commodity futures contracts
                          
                          
                          35,705,020
                          
                          
                          (34,383,000
                          )
                          
                          -Receivable
                              for units sold
                          
                          
                          7,581,679
                          
                          
                          36,080,896
                          
                          
                          -Interest
                              receivable
                          
                          
                          962,551
                          
                          
                          2,626,230
                          
                          
                          -Other
                              assets
                          
                          
                          420,705
                          
                          
                          17,000
                          
                          
                          -Total
                              assets
                          
                          $
                          485,816,754
                          
                          $
                          804,348,574
                          
                          $
                          1,000Liabilities
                              and Partners'
                              CapitalGeneral
                              Partner management fees (Note 3)
                          
                          $
                          226,782
                          
                          $
                          332,736
                          
                          $
                          -Accrued Tax Reporting Costs
                          
                          
                          239,954
                          
                          
                          -
                          
                          
                          -License Fee Payable
                          
                          
                          47,788
                          
                          
                          22,198
                          
                          
                          -Accrued
                            Directors' Fees
                          
                          
                          33,235
                          
                          
                          -
                          
                          
                          -Brokerage
                              commissions payable
                          
                          
                          22,886
                          
                          
                          44,386
                          
                          
                          -Other
                              liabilities
                          
                          
                          23,372
                          
                          
                          -
                          
                          
                          -Total
                              liabilities
                          
                          
                          594,017
                          
                          
                          399,320
                          
                          
                          -Commitments
                              and Contingencies(Notes 3,
                              4 and 5)Partners'
                              CapitalGeneral
                              Partner
                          
                          
                          -
                          
                          
                          -
                          
                          
                          20Limited
                              Partners
                          
                          
                          485,222,737
                          
                          
                          803,949,254
                          
                          
                          980Total
                              Partners'
                              Capital
                          
                          
                          485,222,737
                          
                          
                          803,949,254
                          
                          
                          1,000Total
                              liabilities and
                              partners' capital
                          
                          $
                          485,816,754
                          
                          $
                          804,348,574
                          
                          $
                          1,000Limited
                              Partners' units outstanding
                          
                          
                          6,400,000
                          
                          
                          15,500,000
                          
                          
                          -Net
                              asset value per unit
                          
                          $
                          75.82
                          
                          $
                          51.87
                          
                          $
                          -Market
                              value per unit
                          
                          $
                          75.75
                          
                          $
                          51.60
                          
                          $
                          -See
                              accompanying notes
                              to financial statements.
 62
 United
                                    States Oil Fund, LPSchedule
                                    of
                                    InvestmentsAt
                                    December 31,
                                    2007Open
                                    Futures ContractsGain on
                                    OpenNumber
                                    of
                                
                                Commodity
                                
                                %
                                    of
                                    Partners'Contracts
                                
                                Contracts
                                
                                CapitalForeign ContractsCrude
                                    Oil Future contracts, expires February 2008
                                
                                
                                300
                                
                                $
                                2,361,000
                                
                                
                                0.49United
                                    States
                                    ContractsCrude
                                    Oil Future contracts, expires February 2008
                                
                                
                                4,754
                                
                                
                                33,344,020
                                
                                
                                6.875,054
                                
                                $
                                35,705,020
                                
                                
                                7.36
  Cash
                                    EquivalentsCost
                                
                                Market
                                    ValueUnited
                                    States - Money Market
                                    FundsGoldman
                                    Sachs Financial Square Funds - Treasury Instruments
                                    Fund
                                
                                $
                                253,701,525
                                
                                
                                253,701,525
                                
                                
                                52.28$
                                253,701,525
                                
                                
                                253,701,525
                                
                                
                                52.28
  Cash
                                
                                
                                101,114,524
                                
                                
                                20.84Total
                                  cash and cash equivalents
                                
                                
                                354,816,049
                                
                                
                                73.12Cash
                                    on deposit with
                                    broker
                                
                                
                                86,330,750
                                
                                
                                17.79Other
                                    assets in excess of
                                    liabilities
                                
                                
                                8,370,918
                                
                                
                                1.73Total
                                    Partners'
                                    Capital
                                
                                $
                                485,222,737
                                
                                
                                100.00
  United
                                                States Oil Fund, LPSchedule
                                                of
                                                InvestmentsAt
                                                December 31,
                                                2006Open
                                                Futures ContractsLoss
                                                on
                                                OpenNumber
                                                of
                                            
                                            Commodity
                                            
                                            %
                                                of
                                                Partners'Contracts
                                            
                                            Contracts
                                            
                                            CapitalUnited
                                                  States
                                                  ContractsCrude
                                                Oil Future contracts, expires February
                                                2007
                                            
                                            
                                            13,171
                                            
                                            $
                                            (34,383,000
                                            )
                                            
                                            (4.28
                                            )
  Cash
                                                EquivalentsCost
                                            
                                            Market
                                                ValueUnited
                                                States - Money Market
                                                FundsAIM
                                                STIT- Liquid Asset Portfolio
                                            
                                            $
                                            171,344,554
                                            
                                            
                                            171,344,554
                                            
                                            
                                            21.31AIM
                                              STIT- STIC Prime Portfolio
                                            
                                            
                                            171,230,961
                                            
                                            
                                            171,230,961
                                            
                                            
                                            21.30Goldman
                                                Sachs Financial Square Funds - Prime
                                                Obligations Fund
                                            
                                            
                                            190,268,507
                                            
                                            
                                            190,268,507
                                            
                                            
                                            23.67$
                                            532,844,022
                                            
                                            
                                            532,844,022
                                            
                                            
                                            66.28
  Cash
                                            
                                            
                                            180,039,790
                                            
                                            
                                            22.39Total
                                              cash and cash equivalents
                                            
                                            
                                            712,883,812
                                            
                                            
                                            88.67Cash
                                                on deposit with
                                                broker
                                            
                                            
                                            87,123,636
                                            
                                            
                                            10.84Other
                                                assets in excess of
                                                liabilities
                                            
                                            
                                            38,324,806
                                            
                                            
                                            4.77Total
                                                Partners'
                                                Capital
                                            
                                            $
                                            803,949,254
                                            
                                            
                                            100.00See
                                                accompanying notes
                                                to financial statements.
 63
 United
                                    States Oil Fund,
                                    LPStatements
                                    of OperationsFor
                                    the year ended December
                                    31, 2007, the period from April 10, 2006 (commencement
                                    of operations)
                                    toDecember
                                    31, 2006 and the
                                    period from May 12, 2005 (inception) to December
                                    31,
                                    2005Period
                                    from
                                
                                
                                Period
                                    fromYear
                                    ended
                                
                                April
                                    10, 2006
                                    to
                                
                                
                                May
                                    12, 2005 toDecember
                                    31,
                                    2007
                                
                                December
                                    31,
                                    2006
                                
                                
                                December
                                    31, 2005IncomeGains
                                    (losses) on trading of commodity futures contracts:Realized
                                    gains (losses) on closed positions
                                
                                $
                                185,522,880
                                
                                $
                                (104,063,960
                                )
                                $
                                -Change
                                    in unrealized gains (losses) on open positions
                                
                                
                                70,088,020
                                
                                
                                (34,383,000
                                )
                                
                                -Interest
                                    income
                                
                                
                                34,845,846
                                
                                
                                13,930,431
                                
                                
                                -Other
                                    income
                                
                                
                                297,000
                                
                                
                                129,000
                                
                                
                                -Total
                                    income
                                    (loss)
                                
                                
                                290,753,746
                                
                                
                                (124,387,529
                                )
                                
                                -ExpensesGeneral
                                    Partner management fees (Note 3)
                                
                                
                                3,622,613
                                
                                
                                1,460,448
                                
                                
                                -Brokerage
                                    commissions
                                
                                
                                1,184,956
                                
                                
                                478,713
                                
                                
                                -Other
                                    expenses
                                
                                
                                1,530,281
                                
                                
                                22,198
                                
                                
                                -Total
                                    expenses
                                
                                
                                6,337,850
                                
                                
                                1,961,359
                                
                                
                                -Net
                                    income (loss)
                                
                                $
                                284,415,896
                                
                                $
                                (126,348,888
                                )
                                $
                                -Net
                                    income (loss) per limited
                                    partnership unit
                                
                                $
                                23.95
                                
                                $
                                (15.52
                                )
                                $
                                -Net
                                    income (loss) per weighted
                                    average limited partnership unit
                                
                                $
                                20.71
                                
                                $
                                (18.00
                                )
                                $
                                -Weighted
                                    average limited
                                    partnership units outstanding
                                
                                
                                13,730,137
                                
                                
                                7,018,797
                                
                                
                                -See
                                    accompanying notes
                                    to financial statements.
 64
 United
                                  States Oil Fund, LPStatements
                                  of Changes in
                                  Partners' CapitalFor
                                  the year ended December
                                  31, 2007, the period from April 10, 2006 (commencement
                                  of operations)
                                  toDecember
                                31, 2006 and the period from May 12, 2005 (inception)
                                to December 31,
                                2005General
                                  Partner
                              
                              Limited
                                  Partners
                              
                              TotalBalances, at Inception
                              
                              $
                              -
                              
                              $
                              -
                              
                              $
                              -Initial
                                contribution of capital
                              
                              
                              20
                              
                              
                              980
                              
                              
                              1,000Balances, at December
                                31,
                                2005
                              
                              
                              20
                              
                              
                              980
                              
                              
                              1,000Addition of 29,000,000 partnership units
                              
                              
                              -
                              
                              
                              1,740,249,722
                              
                              
                              1,740,249,722Redemption of 13,500,000 partnership units
                              
                              
                              (20
                              )
                              
                              (809,952,560
                              )
                              
                              (809,952,580
                              )Net loss
                              
                              
                              -
                              
                              
                              (126,348,888
                              )
                              
                              (126,348,888
                              )Balances,
                                  at December 31,
                                  2006
                              
                              
                              -
                              
                              
                              803,949,254
                              
                              
                              803,949,254Addition
                                  of 78,400,000 partnership units
                              
                              
                              -
                              
                              
                              4,402,551,383
                              
                              
                              4,402,551,383Redemption
                                  of 87,500,000 partnership units
                              
                              
                              -
                              
                              
                              (5,005,693,796
                              )
                              
                              (5,005,693,796
                              )Net
                                  income
                              
                              
                              -
                              
                              
                              284,415,896
                              
                              
                              284,415,896Balances,
                                  at December 31,
                                  2007
                              
                              $
                              -
                              
                              $
                              485,222,737
                              
                              $
                              485,222,737Net
                                  Asset Value Per
                                  UnitAt
                                  December 31, 2005
                              
                              $
                              -At
                                  April 10, 2006 (commencement of operations)
                              
                              $
                              67.39At
                                  December 31, 2006
                              
                              $
                              51.87At
                                  December 31, 2007
                              
                              $
                              75.82See
                                  accompanying notes
                                  to financial statements.
  65
  United
                                  States Oil Fund,
                                  LPStatements
                                  of Cash FlowsFor
                                  the year ended December
                                  31, 2007, the period from April 10, 2006 (commencement
                                  of operations)
                                  toDecember
                                  31, 2006 and the
                                  period from May 12, 2005 (inception) to December
                                  31,
                                  2005Period
                                  from
                              
                              
                              Period
                                  fromYear
                                  ended
                              
                              April
                                  10, 2006
                                  to
                              
                              
                              May
                                  12, 2005 toDecember
                                  31, 2007
                              
                              December
                                  31, 2006
                              
                              
                              December
                                  31, 2005Cash
                                  Flows from Operating
                                  Activities:Net
                                  income (loss)
                              
                              $
                              284,415,896
                              
                              $
                              (126,348,888
                              )
                              $
                              -Adjustments
                                  to reconcile net income (loss) to net cash provided
                                  by (used in) operating
                                  activities:Decrease
                                  (increase) in commodity futures trading account
                                  - cash
                              
                              
                              792,886
                              
                              
                              (87,123,636
                              )
                              
                              -Unrealized
                                  gains (losses) on futures contracts
                              
                              
                              (70,088,020
                              )
                              
                              34,383,000
                              
                              
                              -Decrease
                                  (increase) in interest receivable and other assets
                              
                              
                              1,259,974
                              
                              
                              (2,643,230
                              )
                              
                              -Decrease
                                  (increase) in management fees payable
                              
                              
                              (105,954
                              )
                              
                              332,736
                              
                              
                              -Decrease
                                  (increase) in commissions payable
                              
                              
                              (21,500
                              )
                              
                              44,386
                              
                              
                              -Increase
                                  in other liabilities
                              
                              
                              322,151
                              
                              
                              22,198
                              
                              
                              -Net
                                  cash provided by (used in)
                                  operating activities
                              
                              
                              216,575,433
                              
                              
                              (181,333,434
                              )
                              
                              -Cash
                                  Flows from Financing
                                  Activities:Subscription
                                  of partnership units
                              
                              
                              4,431,050,600
                              
                              
                              1,704,168,826
                              
                              
                              1,000Redemption
                                  of partnership units
                              
                              
                              (5,005,693,796
                              )
                              
                              (809,952,580
                              )
                              
                              -Net
                                  cash provided by (used in)
                                  financing activities
                              
                              
                              (574,643,196
                              )
                              
                              894,216,246
                              
                              
                              1,000Net
                                  Decrease (Increase) in Cash
                                  and Cash Equivalents
                              
                              
                              (358,067,763
                              )
                              
                              712,882,812
                              
                              
                              1,000Cash
                                  and Cash
                                  Equivalents,
                                  beginning of period
                              
                              
                              712,883,812
                              
                              
                              1,000
                              
                              
                              -Cash
                                  and Cash
                                  Equivalents,
                                  end of period
                              
                              $
                              354,816,049
                              
                              $
                              712,883,812
                              
                              $
                              1,000See
                                  accompanying notes
                                  to financial statements.
 66
 United
                    States Oil Fund, LP
 Notes
                  to Financial
                  Statements
 For
                  the years ended December 31,
                  2007, 2006 and 2005
  NOTE
                  1 - ORGANIZATION AND
                  BUSINESS
 
 United
                  States Oil Fund, LP ("USOF") was organized as a limited partnership
                  under the
                  laws of the state of Delaware. USOF is a commodity pool that issues
                  units that
                  may be purchased and sold on the American Stock Exchange (the "AMEX"). USOF
                  will continue in perpetuity, unless terminated sooner upon the
                  occurrence of one
                  or more events as described in its Fourth Amended and Restated Agreement of
                  Limited Partnership (the "LP Agreement"). The investment objective
                  of USOF is
                  for the changes in percentage terms of its net asset value to reflect
                  the
                  changes in percentage terms of the price of light, sweet crude
                  oil delivered to
                  Cushing, Oklahoma, as measured by the changes in the price of the
                  futures
                  contract on light, sweet crude oil as traded on the New York Mercantile
                  Exchange
                  (the "NYMEX") that is the near month contract to expire, except when the
                  near month contract is within two weeks of expiration, in which case the
                  futures contract will be the next month contract to expire, less USOF's
                  expenses. USOF will accomplish its objective through investments
                  in futures contracts for light, sweet crude oil, and other types of
                  crude
                  oil, heating oil, gasoline, natural gas and other petroleum-based
                  fuels that are
                  traded on the NYMEX, ICE Futures or other U.S. and foreign
                  exchanges (collectively, "Oil Futures Contracts") and other oil-related
                  investments such as cash-settled options on Oil Futures Contracts,
                  forward
                  contracts for oil, and over-the-counter transactions that are based
                  on the price
                  of crude oil, heating oil, gasoline, natural gas and other petroleum-based
                  fuels, Oil Futures Contracts and indices based on the foregoing
                  (collectively,
                  "Other Oil Interests"). As of December 31, 2007, USOF held 4,754
                  Oil Futures
                  Contracts traded on the NYMEX and 300 Oil Futures Contracts traded
                  on the ICE
                  Futures.
  USOF
                  commenced operations on April 10, 2006 and has a fiscal year ending
                  on December
                  31. Victoria Bay Asset Management, LLC (the "General Partner")
                  is responsible for the management of USOF. The General Partner is
                  a member
                  of the National Futures Association (the "NFA") and
                  became a commodity pool operator with the Commodity Futures Trading
                  Commission effective December 1, 2005. The General Partner is also
                  the general
                  partner of United States Natural Gas Fund, LP ("USNG"), United States 12
                  Month Oil Fund, LP ("US12OF") and United States Gasoline Fund, LP ("USG")
                  which listed their units on the AMEX under the ticker symbols "UNG" on
                  April 18, 2007, "USL" on December 6, 2007 and "UGA" on February 26, 2008,
                  respectively.
  USOF
                  issues limited partnership interests ("units") to certain authorized
                  purchasers
                  ("Authorized Purchasers") by offering creation baskets consisting
                  of 100,000
                  ("Creation Baskets") units through ALPS Distributors, Inc. (the
                  "Marketing Agent"). The purchase price for a Creation Basket is
                  based upon the
                  net asset value of a unit determined as of 4:00 p.m. New York time on the
                  day the order to create the basket is properly received. In addition,
                  authorized
                  purchasers pay USOF a $1,000 fee for each order to create one or more
                  Creation Baskets. Units can be purchased or sold on a nationally recognized
                  securities exchange in smaller increments than a Creation Basket.
                  Units
                  purchased or sold on a nationally recognized securities exchange
                  are not made at
                  the net asset value of USOF but rather at market prices quoted
                  on such
                  exchange.
 
 In
                  April
                  2006, USOF initially registered 17,000,000 units on Form S-1 with
                  the Securities
                  and Exchange Commission (the "SEC"). On April 10, 2006, USOF listed
                  its units on the AMEX under the ticker symbol “USO”. On that day, USOF
                  established its initial net asset value by setting the price at
                  $67.39 per unit
                  and issued 200,000 units in exchange for $13,478,000. The initial
                  offering price
                  of the initial Creation Basket was based on the closing price of
                  the near month
                  Oil Futures Contracts as traded and reported on the NYMEX on the
                  last business
                  day prior to the effective date of USOF's initial registration
                  statement filed
                  on Form S-1. As of December 31, 2007, USOF had registered a total
                  of 127,000,000
                  units. USOF also commenced investment operations on April 10, 2006
                  by purchasing
                  Oil Futures Contracts traded on the NYMEX based on light, sweet crude
                  oil.
  NOTE
                  2 - SUMMARY OF SIGNIFICANT
                  ACCOUNTING POLICIES
 
 Revenue
                  Recognition
 
 Commodity
                  futures contracts, forward contracts, physical commodities, and
                  related options
                  are recorded on the trade date. All such transactions are recorded
                  on the
                  identified cost basis and marked to market daily. Unrealized gains
                  or losses on
                  open contracts are reflected in the statement of financial condition and in
                  the difference between the original contract amount and the market
                  value (as
                  determined by exchange settlement prices for futures contracts
                  and related
                  options and cash dealer prices at a predetermined time for forward
                  contracts,
                  physical commodities, and their related options) as of the last
                  business day of
                  the year or as of the last date of the financial statements. Changes in the
                  unrealized gains or losses between periods are reflected in the statement
                  of operations. USOF earns interest on its assets denominated in
                  U.S. dollars on
                  deposit with the futures commission merchant at the 90-day Treasury bill
                  rate. In addition, USOF earns interest on funds held at the custodian
                  at
                  prevailing market rates earned on such investments.
 
 Brokerage
                  Commissions
 
 Brokerage
                  commissions on all open commodity futures contracts are accrued
                  on a full-turn
                  basis.
  Income
                    Taxes
 
 USOF
                    is
                    not subject to federal income taxes; each partner reports his/her
                    allocable
                    share of income, gain, loss deductions or credits on his/her
                    own income tax
                    return.
  Additions
                      and
                      Redemptions
 
 Authorized
                      Purchasers may purchase Creation Baskets from USOF as of the beginning of
                      each business day based upon the prior day's net asset value.
                      Authorized
                      Purchasers may redeem units from USOF only in blocks of 100,000
                      units called
“Redemption Baskets”. The amount of the redemption proceeds for a Redemption
                      Basket will be equal to the net asset value of the units in
                      the Redemption
                      Basket determined as of 4:00 p.m. New York time on the day
                      the order to redeem
                      the basket is properly received.
  USOF
                      receives or pays the proceeds from units sold or
                      redeemed one business day after the trade-date of the purchase
                      or redemption.
                      The amount due from Authorized Purchasers is reflected in USOF's
                      condensed
                      statement of financial condition as receivable for units sold,
                      and amounts
                      payable to Authorized Purchasers upon redemption are reflected
                      as payable for
                      units redeemed.
 67
 Partnership
                  Capital and Allocation of
                  Partnership Income and Losses
 
 Profit
                  or
                  loss shall be allocated among the partners of USOF in proportion
                  to the number
                  of units each partner holds as of the close of each month. The
                  General Partner
                  may revise, alter or otherwise modify this method of allocation
                  as described in
                  the LP Agreement.
 
 Calculation
                  of Net Asset
                  Value
 
 USOF
                  calculates net asset value on each trading day by taking the current
                  market
                  value of its total assets, subtracting any liabilities and dividing
                  the amount
                  by the total number of units issued and outstanding. USOF uses
                  the closing price
                  for the contracts on the relevant exchange on that day to determine
                  the value of
                  contracts held on such exchange.
 
 Net
                  Income (Loss)
                  per Unit
 
 Net
                  income (loss) per unit is the difference between the net asset value per
                  unit at the beginning of each period and at the end of each period. The
                  weighted average number of units outstanding was computed for purposes of
                  disclosing net loss per weighted average unit. The weighted average
                  units are
                  equal to the number of units outstanding at the end of the period,
                  adjusted
                  proportionately for units redeemed based on the amount of time
                  the units were
                  outstanding during such period. There were no units held by the
                  General
                  Partner at December 31, 2007.
  Offering
                    Costs
 
 Offering
                    costs incurred in connection with the registration of additional
                    units after the
                    initial registration of units are borne by USOF. These costs include
                    registration fees paid to regulatory agencies and all legal,
                    accounting,
                    printing and other expenses associated therewith. These costs
                    will be accounted
                    for as a deferred charge and thereafter amortized to expense
                    over twelve months
                    on a straight line basis or a shorter period if
                    warranted.
 
 Cash
                  Equivalents
 
 Cash
                  and
                  cash equivalents include money market portfolios and overnight
                  time deposits
                  with original maturity dates of three months or less.
 
 Use
                  of Estimates
 
 The
                  preparation of financial statements in conformity with accounting
                  principles generally accepted in the United States of America requires
                  USOF’s
                  management to make estimates and assumptions that affect the reported
                  amount of
                  assets and liabilities and disclosure of contingent assets and
                  liabilities at
                  the date of the financial statements, and the reported amounts of the
                  revenue and expenses during the reporting period. Actual results
                  could differ
                  from those estimates and assumptions.
  NOTE 3
                    - FEES PAID BY THE FUND
                    AND RELATED PARTY TRANSACTIONS 
 General
                      Partner Management
                      Fee
 
 Under
                    the
                    LP Agreement, the General Partner is responsible for investing
                    the assets of
                    USOF in accordance with the objectives and policies of USOF.
                    In addition, the
                    General Partner has arranged for one or more third parties to
                    provide
                    administrative, custody, accounting, transfer agency and other
                    necessary
                    services to USOF. For these services, USOF is contractually obligated
                    to pay the
                    General Partner a fee, which is paid monthly and based on average
                    daily net
                    assets, that is equal to 0.50% per annum on average net assets
                    of $1,000,000,000
                    or less and 0.20% per annum on average daily net assets that
                    are greater than
                    $1,000,000,000.
  Ongoing
                      Registration Fees and Other
                      Offering Expenses
 
 Since
                          January 19, 2007, offering costs incurred in connection
                          with the registration of
                          additional units are borne by USOF. These costs include registration or
                          other fees paid to regulatory agencies in connection with
                          the offer and sale of
                          units, and all legal, accounting, printing and other expenses
                          associated
                          with such offer and sale. For the year ended December 31, 2007, and
                          the periods ended December 31, 2006 and December 31, 2005,
                          USOF incurred
                          $437,973, $0 and $0, respectively in registration fees and other offering
                          expenses.
 Director's
                        Fees
  USOF
                        is
                        responsible for paying the fees and expenses, including directors'
                        and officers'
                        liability insurance, of the independent directors of the
                        General Partner who are
                        also audit committee members. USOF shares these fees with US12OF and
                        USNG based on the relative assets of each fund, computed
                        on a daily basis. These
                        fees for the calendar year 2007 amounted to a total of $286,000 for all of
                        the funds.
 68
 Licensing
                        Fees
  As
                        discussed in Note 4, USOF entered into a licensing agreement with the NYMEX
                        on May 30, 2007. The agreement has an effective date of April
                        10, 2006. Pursuant
                        to the agreement, USOF and the affiliated funds managed by
                        the General Partner
                        pay a licensing fee that is equal to 0.04% for the first $1,000,000,000 of
                        combined assets of the funds and 0.02% for combined assets
                        above $1,000,000,000.
                        Since inception, USOF has incurred $407,533 under this
                        arrangement.
  Investor
                          Tax Reporting
                          Cost
  The
                          fees
                          and expenses associated with USOF's tax accounting and
                          reporting requirements,
                          with the exception of certain initial implementation service
                          fees and base
                          service fees which are borne by the General Partner, are
                          paid by
                          USOF. These costs are estimated to be $450,000 for the year ended
                          December
                          31, 2007.
  Other
                        Expenses and
                        Fees
  In
                        addition to the fees described above,
                        USOF pays all brokerage fees, taxes and other expenses in connection
                        with
                        the operation of USOF, excluding costs and expenses paid by the General
                        Partner as outlined in Note 4.
 NOTE
                  4 - CONTRACTS AND
                  AGREEMENTS
 
 USOF
                  is
                  party to a marketing agent agreement, dated as of March 13, 2006, with the
                  Marketing Agent, whereby the Marketing Agent provides certain marketing
                  services
                  for USOF as outlined in the agreement. The fees of the Marketing
                  Agent, which
                  are borne by the General Partner, include a marketing fee of $425,000
                  per annum
                  plus the following incentive fee: 0.00% on USOF's assets from $0
                  - $500 million;
                  0.04% on USOF's assets from $500 million - $4 billion; and 0.03%
                  on USOF's
                  assets in excess of $4 billion.
 
 The
                  above
                  fees do not include the following expenses, which are also borne
                  by the General
                  Partner: the cost of placing advertisements in various periodicals;
                  web
                  construction and development; or the printing and production of
                  various
                  marketing materials.
 
 USOF
                  is
                  also party to a custodian agreement, dated March 13, 2006, with
                  Brown Brothers
                  Harriman & Co. ("BBH&Co."), whereby BBH&Co. holds investments on
                  behalf of USOF. The General Partner pays the fees of the custodian, which
                  shall be determined by the parties from time to time. In addition,
                  USOF is party
                  to an administrative agency agreement dated, March 13, 2006, with
                  the General
                  Partner and BBH&Co., whereby BBH&Co. acts as the administrative agent,
                  transfer agent and registrar for USOF. The General Partner also
                  pays the fees of
                  BBH&Co. for its services under this agreement and such fees will be
                  determined by the parties from time to time.
 
 Currently,
                  the General Partner pays BBH&Co. for its services, in the foregoing
                  capacities, the greater of a minimum of $125,000 annually or an
                  asset-based
                  charge of (a) 0.06% for the first $500 million of USOF's, USNG's, US12OF's
                  and USG's combined net assets, (b) 0.0465% for USOF's, USNG's,
                  US12OF's and
                  USG's combined net assets greater than $500 million but less than
                  $1 billion,
                  and (c) 0.035% for USOF's, USNG's, US12OF's and USG's combined net assets
                  in excess of $1 billion. The General Partner also pays a $25,000
                  annual fee for
                  the transfer agency services and transaction fees ranging from
                  $7.00 to $15.00
                  per transaction.
 
 USOF
                  invests primarily in Oil Futures Contracts traded on the NYMEX.
                  On May 30, 2007,
                  USOF and the NYMEX entered into a license agreement whereby USOF
                  was granted a
                  non-exclusive license to use certain of the NYMEX's settlement
                  prices and
                  service marks. The agreement has an effective date of April 10,
                  2006. Under
                  the license agreement, USOF and the affiliated funds managed by the
                  General
                  Partner pay the NYMEX an asset-based fee for the license, the terms
                  of which are
                  described in Note 3.
 
 USOF
                  expressly disclaims any association with the NYMEX or endorsement
                  of USOF by the
                  NYMEX and acknowledges that “NYMEX” and “New York Mercantile Exchange” are
                  registered trademarks of the NYMEX.
 
 USOF
                  has
                  entered into a brokerage agreement with UBS Securities LLC ("UBS
                  Securities").
                  The agreement requires UBS Securities to provide services to USOF
                  in connection
                  with the purchase and sale of Oil Futures Contracts and Other Oil
                  Interests that
                  may be purchased and sold by or through UBS Securities for USOF's
                  account. The
                  agreement provides that UBS Securities charge USOF commissions
                  of approximately
                  $7perround-turn trade, plus applicable exchange and NFA
                  fees for
                  Oil Futures Contracts and options on Oil Futures Contracts.
 69
 NOTE
                  5 - FINANCIAL INSTRUMENTS,
                  OFF-BALANCE SHEET RISKS AND CONTINGENCIES
 
 USOF engages
                  in the speculative trading of Oil Futures Contracts and options
                  on Oil Futures
                  Contracts (collectively, "derivatives"). USOF is exposed to both
                  market risk,
                  which is the risk arising from changes in the market value of the
                  contracts, and
                  credit risk, which is the risk of failure by another party to perform
                  according
                  to the terms of a contract.
 
 All
                  of
                  the contracts currently traded by USOF are exchange-traded. The
                  risks associated
                  with exchange-traded contracts are generally perceived to be less
                  than those
                  associated with over-the-counter transactions since, in over-the-counter
                  transactions, USOF must rely solely on the credit of their respective
                  individual
                  counterparties. However, in the future, if USOF were to enter into
                  non-exchange traded contracts, it would be subject to the credit
                  risk associated
                  with counterparty non-performance. The credit risk from counterparty
                  non-performance associated with such instruments is the net unrealized
                  gain, if
                  any. USOF also has credit risk since the sole counterparty to all domestic
                  and foreign futures contracts is the exchange on which the relevant
                  contracts are traded. In addition, USOF bears the risk of financial
                  failure by
                  the clearing broker.
  The
                    purchase and sale of futures and options on futures contracts
                    require margin
                    deposits with a futures commission merchant. Additional deposits
                    may be
                    necessary for any loss on contract value. The Commodity Exchange
                    Act requires a
                    futures commission merchant to segregate all customer transactions
                    and assets
                    from the futures commission merchant’s proprietary activities.
 
 USOF’s
                    cash and other property, such as U.S. Treasury Bills, deposited
                    with a futures
                    commission merchant are considered commingled with all other
                    customer funds
                    subject to the futures commission merchant’s segregation requirements. In the
                    event of a futures commission merchant’s insolvency, recovery may be limited to
                    a pro rata share of segregated funds available. It is possible
                    that the
                    recovered amount could be less than the total of cash and other
                    property
                    deposited.
  USOF
                    invests its cash in money market funds that seek to maintain
                    a stable net asset
                    value. USOF is exposed to any risk of loss associated with an
                    investment in
                    these money market funds. As of December 31, 2007, 2006 and 2005,
                    USOF had
                    deposits in domestic and foreign financial institutions in the
                    amount of
                    $187,445,274, $180,039,790 and $0, respectively. This amount
                    is subject to loss
                    should these institutions cease operations.
  For
                    derivatives, risks arise from changes in the market value of
                    the contracts.
                    Theoretically, USOF is exposed to a market risk equal to the
                    value of futures
                    contracts purchased and unlimited liability on such contracts
                    sold short. As
                    both a buyer and a seller of options, USOF pays or receives a
                    premium at the
                    outset and then bears the risk of unfavorable changes in the
                    price of the
                    contract underlying the option.
 
 USOF’s
                    policy is to continuously monitor its exposure to market and
                    counterparty risk
                    through the use of a variety of financial, position and credit
                    exposure
                    reporting controls and procedures. In addition, USOF has a policy
                    of requiring
                    review of the credit standing of each broker of counterparty with which
                    it
                    conducts business.
 The
                  financial instruments held by USOF are reported in its statement of
                  financial condition at market or fair value, or at carrying amounts
                  that
                  approximate fair value, because of their highly liquid nature and
                  short-term
                  maturity.
  Goldman,
                      Sachs & Co. (“Goldman Sachs”) sent USOF a letter on March 17, 2006,
                      providing USOF and the General Partner notice under 35 U.S.C.
                      Section 154(d) of
                      two pending United States patent applications, Publication
                      Nos. 2004/0225593A1
                      and 2006/0036533A1. Both patent applications are generally
                      directed to a method
                      and system for creating and administering a publicly traded
                      interest in a
                      commodity pool. In particular, the Abstract of each patent
                      application defines a
                      means for creating and administering a publicly traded interest
                      in a commodity
                      pool that includes the steps of forming a commodity pool having
                      a first position
                      in a futures contract and a corresponding second position in
                      a margin
                      investment, and issuing equity interests of the commodity pool
                      to third party
                      investors. Subsequently, two U.S. Patents were issued; the
                      first, patent number
                      US7,283,978B2, was issued on October 16, 2007, and the second,
                      patent number
                      US7,319,984B2, was issued on January 15, 2008.
 
 Preliminarily,
                      USOF's management is of the view that the structure and operations of USOF
                      and its affiliated commodity pools do not infringe these patents.
                      USOF is also
                      in the process of reviewing prior art (prior structures and
                      operations of
                      similar investment vehicles) that may invalidate one or more
                      of the claims in
                      these patents. In addition, USOF has retained patent counsel
                      to advise it on
                      these matters and is in the process of obtaining their opinions
                      regarding the
                      non-infringement of each of these patents by USOF and/or the
                      patents' invalidity
                      based on prior art. If the patents were alleged to apply to
                      USOF's structure
                      and/or operations, and are found by a court to be valid and
                      infringed, Goldman
                      Sachs may be awarded significant monetary damages and/or injunctive
                      relief. See
                      “USOF's Operating Risks — Third parties may infringe upon or otherwise
                      violate intellectual property rights or assert that the General
                      Partner has
                      infringed or otherwise violated their intellectual property
                      rights, which may
                      result in significant costs and diverted attention.”
 70
 NOTE 6
                  - FINANCIAL
                  HIGHLIGHTS
 
 The
                  following table presents per unit performance data and other supplemental
                  financial data for the year ended December 31, 2007, the period
                  from April 10,
                  2006 (commencement of operations) to December 31, 2006 and the period from
                  May 12, 2005 (inception) to December 31, 2005 for the limited partners.
                  This information has been derived from information presented in
                  the condensed
                  financial statements.
  For
                              the period from
                          
                          For
                              the
                              period fromYear
                              ended
                          
                          
                          April
                              10, 2006 to
                          
                          May
                              12, 2005
                              toDecember
                              31, 2007
                          
                          
                          December
                              31, 2006
                          
                          December
                              31,
                              2005Per
                              Unit Operating
                              Performance:Net
                              asset value, beginning of period
                          
                          $
                          51.87
                          
                          
                          $
                          67.39
                          
                          $
                          -Total income
                              (loss)
                          
                          
                          24.41
                          
                          
                          
                          (15.24
                          )
                          
                          -Total
                              expenses
                          
                          
                          (0.46
                          )
                          
                          
                          (0.28
                          )
                          
                          -Net
                              increase (decrease) in net asset value
                          
                          
                          23.95
                          
                          
                          
                          (15.52
                          )
                          
                          -Net
                              asset value, end of period
                          
                          $
                          75.82
                          
                          
                          $
                          51.87
                          
                          
                          -Total
                              Return
                          
                          
                          46.17
                          %
                          
                          
                          (23.03
                          )%
                          
                          -
                          %Ratios
                              to Average Net Assets
                              (annualized)Total income
                              (loss)
                          
                          
                          39.68
                          %
                          
                          
                          (42.59
                          )%
                          
                          -
                          %Expenses
                              excluding management fees
                          
                          
                          (0.36
                          )%
                          
                          
                          (0.17
                          )%
                          
                          -
                          %Management
                              fees
                          
                          
                          (0.50
                          )%
                          
                          
                          (0.50
                          )%
                          
                          -
                          %Net income
                              (loss)
                          
                          
                          38.82
                          %
                          
                          
                          (43.26
                          )%
                          
                          -
                          %
  Total
                  returns are calculated based on the change in value during the
                  period. An
                  individual limited partner’s total return and ratio may vary from the above
                  total returns and ratios based on the timing of contributions to
                  and withdrawals
                  from USOF.
  NOTE
                    7- 
QUARTERLY FINANCIAL DATA (Unaudited)
  The
                    following summarized (unaudited) quarterly financial information
                    presents the
                    results of operations and other data for three-month periods
                    ended March 31,
                    June 30, September 30 and December 31, 2007 and 2006.
  First
                            Quarter
                          
                          Second
                            Quarter
                          
                          Third
                            Quarter
                          
                          Fourth
                            Quarter2007
                          
                          2007
                          
                          2007
                          
                          2007Total
                              Income (Loss)
                          
                          $
                          96,724,633
                          
                          $
                          (2,341,885
                          )
                          $
                          94,227,844
                          
                          $
                          102,143,154Total
                              Expenses
                          
                          1,760,542
                          
                          2,089,154
                          
                          1,189,531
                          
                          1,298,623Net
                              Income (Loss)
                          
                          $
                          94,964,091
                          
                          $
                          (4,431,039
                          )
                          $
                          93,038,313
                          
                          $
                          100,844,531Net
                              Income (Loss) per Unit
                          
                          $
                          1.69
                          
                          $
                          (0.38
                          )
                          $
                          9.48
                          
                          $
                          13.16
  First
                            Quarter
                          
                          Second
                            Quarter
                          
                          Third
                            Quarter
                          
                          Fourth
                            Quarter2006
                          
                          2006
                          
                          2006
                          
                          2006Total
                              Income (Loss)
                          
                          $
                          -
                          
                          $
                          (2,025,863
                          )
                          $
                          (81,746,774
                          )
                          $
                          (40,614,892
                          )Total
                              Expenses
                          
                          -
                          
                          289,323
                          
                          581,909
                          
                          1,090,127Net
                              Income (Loss)
                          
                          $
                          -
                          
                          $
                          (2,315,186
                          )
                          $
                          (82,328,683
                          )
                          $
                          (41,705,019
                          )Net
                              Income (Loss) per Unit
                          
                          $
                          -
                          
                          $
                          2.43
                          
                          $
                          (12.76
                          )
                          $
                          (5.19
                          )
 71
 Item 9.
                      Changes
                          in and Disagreements
                          With Accountants on Accounting and Financial
                          Disclosure.
  Not
                applicable.
  Item 9A.
                      Controls
                          and
                          Procedures.
  Disclosure
                  Controls and
                  Procedures.
  USOF
                  maintains disclosure controls and procedures that are designed
                  to ensure that
                  material information required to be disclosed in USOF’s periodic reports
                  filed or submitted under the Exchange Act, is recorded, processed,
                  summarized and reported within the time period specified in the
                  SEC’s rules and
                  forms.
  The
                  duly
                  appointed officers of the General Partner, including its chief executive
                  officer and chief financial officer who perform functions equivalent
                  to those of a principal executive officer and principal financial
                  officer of
                  USOF if USOF had any officers, have evaluated the effectiveness
                  of USOF’s
                  disclosure controls and procedures and have concluded that the disclosure
                  controls and procedures of USOF have been effective as of the end
                  of the period
                  covered by this annual
                  report.
 
 Management’s
                  Annual Report on
                  Internal Control Over Financial Reporting.
  USOF
                    is
                    responsible for establishing and maintaining adequate internal
                    control over
                    financial reporting. USOF’s internal control system is designed to provide
                    reasonable assurance to its management and the board of directors
                    of the General
                    Partner regarding the preparation and fair presentation of published
                    financial
                    statements.  All internal control systems, no matter how well
                    designed, have inherent limitations. Therefore, even those systems
                    determined to
                    be effective can provide only reasonable assurance with respect
                    to financial
                    statement preparation and presentation.
  USOF’s
                    management assessed the effectiveness of USOF’s internal control over financial
                    reporting as of December 31, 2007.  In making this assessment, it used
                    the criteria set forth by the Committee of Sponsoring Organizations
                    of the
                    Treadway Commission in Internal Control
                    Integrated
                    Framework. Based on the assessment, USOF believes that, as of December
                    31, 2007, its internal control over financial reporting is
                    effective.
  Attestation
                    Report of Registered Public Accounting Firm.
  Auditors’
Report
                        on Internal Control
                        over Financial Reporting
 Report
                        of Independent
                        Registered Public Accounting Firm
 
 To
                      the Partners of
 United
                        StatesOil
                        Fund, LP
  We
                        have audited the internal control
                        over financial reporting of United States Oil Fund, LP (the
“Fund”) as of
                        December 31, 2007, based on criteria established in Internal
                        Control —
Integrated Framework issued by the Committee of Sponsoring
                        Organizations of the
                        Treadway Commission. The Fund’s management is responsible for maintaining
                        effective internal control over financial reporting and for
                        its assessment of
                        the effectiveness of internal control over financial reporting,
                        included in the
                        accompanying Report of Management on Internal Control over
                        Financial Reporting.
                        Our responsibility is to express an opinion on the Fund’s internal control over
                        financial reporting based on our audit.
  We
                        conducted our audit in accordance
                        with the standards of the Public Company Accounting Oversight
                        Board (United
                        States). Those standards require that we plan and perform
                        the audit to obtain
                        reasonable assurance about whether effective internal control
                        over financial
                        reporting was maintained in all material respects. Our audit
                        included obtaining
                        an understanding of internal control over financial reporting,
                        assessing the
                        risk that a material weakness exists, testing and evaluating
                        the design and
                        operating effectiveness of internal control based on the
                        assessed risk, and
                        performing such other procedures as we considered necessary
                        in the
                        circumstances. We believe that our audit provides a reasonable
                        basis for our
                        opinion.
  A
                        company’s internal control over
                        financial reporting is a process designed by, or under the
                        supervision of, the
                        company’s principal executive and principal financial officers, or
                        persons
                        performing similar functions, and effected by the company’s board of directors,
                        management, and other personnel to provide reasonable assurance
                        regarding the
                        reliability of financial reporting and the preparation of
                        financial statements
                        for external purposes in accordance with generally accepted
                        accounting
                        principles. A company’s internal control over financial reporting includes those
                        policies and procedures that (1) pertain to the maintenance of records
                        that, in reasonable detail, accurately and fairly reflect
                        the transactions and
                        dispositions of the assets of the company; (2) provide reasonable assurance
                        that transactions are recorded as necessary to permit preparation
                        of financial
                        statements in accordance with generally accepted accounting
                        principles, and that
                        receipts and expenditures of the company are being made only
                        in accordance with
                        authorizations of management and directors of the company;
                        and (3) provide
                        reasonable assurance regarding prevention or timely detection
                        of unauthorized
                        acquisition, use, or disposition of the company’s assets that could have a
                        material effect on the financial statements.
 
 Because
                        of the inherent limitations of
                        internal control over financial reporting, including the
                        possibility of
                        collusion or improper management override of controls, material
                        misstatements
                        due to error or fraud may not be prevented or detected on
                        a timely basis. Also,
                        projections of any evaluation of the effectiveness of the
                        internal control over
                        financial reporting to future periods are subject to the
                        risk that the controls
                        may become inadequate because of changes in conditions, or
                        that the degree of
                        compliance with the policies or procedures may
                        deteriorate.
 
 In
                        our
                        opinion, the Fund maintained, in all material respects, effective
                        internal
                        control over financial reporting as of December 31, 2007,
                        based on the criteria
                        established in Internal Control — Integrated Framework issued by the
                        Committee of Sponsoring Organizations of the Treadway Commission.
  We
                        have also audited, in accordance with
                        the standards of the Public Company Accounting Oversight
                        Board (United States),
                        the financial statements as of and for the year endedDecember
                        31, 2007, of
                        the Fund and our report datedMarch
                        1, 2008expressed
                        an unqualified opinion on
                        those financial statements.
 /s/
                        SPICER
                        JEFFRIES LLP
 Greenwood
                        Village,Colorado
 March
                        1,
                        2008
 Change
                  in Internal Control Over
                  Financial Reporting.
  There
                  were no changes in USOF’s internal control over financial reporting during
                  USOF’s last fiscal quarter that have materially affected, or are reasonably
                  likely to materially affect, USOF’s internal control over financial
                  reporting.
 72
 Item 9B.
                        Other
                            Information.
  Monthly
                      Account
                      Statements.
  Pursuant
                      to the requirement under part 4.22 of the CEA, each month USOF
                      publishes an
                      account statement for its unitholders, which includes a Statement
                      of Income
                      (Loss) and a Statement of Changes in NAV. The account statement
                      is filed with
                      the SEC on a current report on Form 8-K pursuant to Section
                      13 or 15(d) of the
                      Exchange Act and posted each month on USOF's website at
                      www.unitedstatesoilfund.com.
  Part
                III
 
 Item 10.
                      Directors,
                          Executive Officers
                          and Corporate Governance.
  Messrs.
                Gerber and Mah also serve as executive officers of the General Partner.
                USOF has
                no executive officers. Its affairs are generally managed by the General
                Partner.
                The following individuals serve as Management Directors of the General
                Partner.
 Nicholas
                    Gerber has been the President and CEO of the General Partner
                    since June
                    9, 2005 and a Management Director of the General Partner since
                    May 10, 2005. He
                    maintains his main business office at 1320 Harbor Bay Parkway,
                    Suite 145,
                    Alameda, California 94502. Mr. Gerber acts as a portfolio manager
                    for USOF,
                    USNG, US12OF and USG. Mr. Gerber will act as a portfolio manager
                    for USHO and
                    US12NG. He registered with the NFA as a Principal of the General
                    Partner in
                    November 2005, and as an Associated Person of the General Partner
                    in December
                    2005. Currently, Mr. Gerber manages USOF, USNG, US12OF and USG.
                    He will also
                    manage USHO and US12NG. Mr. Gerber has also served as Vice President/Chief
                    Investment Officer of Lyon’s Gate Reinsurance Company, Ltd. since June of 2003.
                    Mr. Gerber has an extensive background in securities portfolio
                    management and in
                    developing investment funds that make use of indexing and futures
                    contracts. He
                    is also the founder of Ameristock Corporation, a California-based
                    investment
                    adviser registered under the Advisers Act, that has been sponsoring
                    and
                    providing portfolio management services to mutual funds since
                    1995. Since 1995,
                    Mr. Gerber has been the portfolio manager of the Ameristock Mutual
                    Fund, Inc. a
                    mutual fund registered under the 1940 Act, focused on large cap
                    U.S. equities
                    that currently has approximately $482 million in assets. He has
                    also been a
                    Trustee for the Ameristock ETF Trust since June 2006, and a portfolio
                    manager
                    for the Ameristock/Ryan 1 Year, 2 Year, 5 Year, 10 Year and 20
                    Year Treasury ETF
                    since June 2007. In these roles, Mr. Gerber has gained extensive
                    experience in
                    evaluating and retaining third-party service providers, including
                    custodians,
                    accountants, transfer agents, and distributors. Prior to managing
                    Ameristock
                    Mutual Fund Inc., Mr. Gerber served as a portfolio manager with
                    Bank of America
                    Capital Management. While there he was responsible for the daily
                    stewardship of
                    four funds with a combined value in excess of $240 million. At
                    Bank of America
                    Capital Management, Mr. Gerber worked extensively in the development
                    and
                    managing of mutual funds and institutional accounts that were
                    designed to track
                    assorted equity market indices such as the Standard & Poor’s 500 and the
                    Standard & Poor’s Midcap 400. Before joining Bank of America, he was
                    managing director and founder of the Marc Stevens Futures Index
                    Fund, a fund
                    that combined the use of commodity futures with equity stock
                    index futures. The
                    futures index fund was a commodity pool and Mr. Gerber was the
                    CPO. It was
                    ultimately purchased by Newport Commodities. Mr. Gerber’s two decades of
                    experience in institutional investment include a period of employment
                    as a floor
                    trader on the New York Futures Exchange. Mr. Gerber has passed
                    the Series 3
                    examination for associated persons. He holds an MBA in finance
                    from the
                    University of San Francisco and a BA from Skidmore College. Mr.
                    Gerber is 45
                    years old.
 
 Howard
                    Mah
                    has been a Management Director of the General Partner since May
                    10, 2005,
                    Secretary of the General Partner since June 9, 2005, and Chief
                    Financial Officer
                    of the General Partner since May 23, 2006. In these roles, Mr.
                    Mah is currently
                    involved in the management of USOF, USNG, US12OF and USG and will be
                    involved in the management of USHO and US12NG. Mr. Mah also serves
                    as the
                    General Partner’s Chief Compliance Officer. He received a Bachelor of Education
                    from the University of Alberta, in 1986 and an MBA from the University
                    of San
                    Francisco in 1988. He has been Secretary and Chief Compliance
                    Officer of the
                    Ameristock ETF Trust since February 2007, Compliance Officer
                    of Ameristock
                    Corporation since 2001, a tax & finance consultant in private practice since
                    1995, Secretary of Ameristock Mutual Fund since 1995 and Ameristock
                    Focused
                    Value Fund from December 2000 to January 2005, Chief Compliance
                    Officer of
                    Ameristock Mutual Fund since 2004 and the Co-Portfolio Manager
                    of the Ameristock
                    Focused Value Fund from December 2000 to January 2005. Mr. Mah
                    is 43 years
                    old.
 
 Andrew
                    F.
                    Ngim has been a Management Director of the General Partner
                    since May 10,
                    2005 and Treasurer of the General Partner since June 9, 2005.
                    As Treasurer of
                    the General Partner, Mr. Ngim is currently involved in the management
                    of USOF,
                    USNG, US12OF and USG and will be involved in the management of USHO and
                    US12NG. He received a Bachelor of Arts from the University of
                    California at
                    Berkeley in 1983. Mr. Ngim has been the Managing Director and
                    co-portfolio
                    manager of Ameristock Corporation since 1999, Trustee of the
                    Ameristock ETF
                    Trust since February 2007, and a portfolio manager for the Ameristock/Ryan
                    1
                    Year, 2 Year, 5 Year, 10 Year and 20 Year Treasury ETF since
                    June 2007. He was
                    the co-portfolio manager of the Ameristock Large Company Growth
                    Fund from
                    December 2000 to June 2002 and a Benefits Consultant with PricewaterhouseCoopers
                    from 1994 to 1999. Mr. Ngim is 47 years old.
 
 Robert
                    L.
                    Nguyen has been a Management Director of the General Partner
                    since May
                    10, 2005. As a Management Director of the General Partner, Mr.
                    Nguyen is
                    currently involved on the management of USOF, USNG, US12OF and
                    USG and will
                    be involved in the management of USHO and US12NG. He received
                    a Bachelor of
                    Science from California State University Sacramento in 1981.
                    Mr. Nguyen has been
                    the Managing Principal of Ameristock Corporation since 2000.
                    He was Co-Portfolio
                    Manager of the Ameristock Large Company Growth Fund from December
                    2000 to June
                    2002 and Institutional Specialist with Charles Schwab & Company Inc. from
                    1995 to 1999. Mr. Nguyen is 48 years old.
 73
 
 The
                    following individuals provide significant services to USOF but
                    are employed by
                    the entities noted below.
 
 John
                    P.
                    Love acts as the Portfolio Operations Manager for USOF, USNG,
                    US12OF and
                    USG and is expected to be the Portfolio Operations Manager for USHO
                    and
                    US12NG. Mr. Love is also employed by the General Partner. Mr.
                    Love has served as
                    the operations manager of Ameristock Corporation since 2002,
                    where he was
                    responsible for back office and marketing activities for the
                    Ameristock Mutual
                    Fund and Ameristock Focused Value Fund and for the firm in general.
                    From 1993 to
                    September 2002, Mr. Love was a project manager and managing director
                    for IT and
                    interactive media development firms, including TouchVision Interactive
                    and
                    Digital Boardwalk Inc. providing leadership to project teams
                    from pre-contract
                    through deployment, while assisting with business and process
                    development. As
                    the managing director of Jamison/Gold (Keane Interactive), he
                    provided
                    leadership to all departments including operations, production,
                    technology,
                    sales, marketing, administration, recruiting, and finance. Mr.
                    Love holds a
                    Series 3 license and is registered with the NFA as an Associated
                    Person of the
                    General Partner. He holds a BFA in cinema-television from the
                    University of
                    Southern California. Mr. Love is 36 years old.
 
 John
                    T. Hyland,
                    CFA acts as a Portfolio Manager and as the Chief Investment
                    Officer for
                    the General Partner. Mr. Hyland is employed by the General Partner.
                    He
                    registered with the NFA as an Associated Person of the General
                    Partner in
                    December 2005, and as a Principal of the General Partner in January
                    2006. Mr. Hyland became the Portfolio Manager for USOF, USNG, US12OF
                    and USG in April 2006, March 2007, June 2007 and April 2007,
                    respectively, and
                    as Chief Investment Officer of the General Partner, acts in such
                    capacity on
                    behalf of USOF, USNG, US12OF and USG. He is also expected to
                    become the
                    Portfolio Manager for USHO and US12NG. As part of his responsibilities for
                    USOF, USNG, US12OF and USG, Mr. Hyland handles day-to-day trading, helps
                    set investment policies, and oversees USOF’s, USNG’s, US12OF's and
                    USG's activities with its futures commission brokers,
                    custodian-administrator, and marketing agent. Mr. Hyland has
                    an extensive
                    background in portfolio management and research with both equity
                    and fixed
                    income securities, as well as in the development of new types
                    of complex
                    investment funds. In July 2001, Mr. Hyland founded Towerhouse
                    Capital
                    Management, LLC, a firm that provides portfolio management and
                    new fund
                    development expertise to non-U.S. institutional investors. Mr.
                    Hyland has been,
                    and remains, a Principal and Portfolio Manager for Towerhouse.
                    From July 2001 to
                    January 2002, Mr. Hyland was the Director of Global Property
                    Securities Research
                    for Roulac International, where he worked on the development
                    of a hedge fund
                    focused on global real estate stocks. From 1996 through 2001,
                    Mr. Hyland was the
                    Director of Securities Research and Portfolio Manager for the
                    capital markets
                    division of CB Richard Ellis, a global commercial real estate
                    services firm. His
                    division provided portfolio management of equities as an advisor
                    or sub-advisor
                    for mutual funds and separate accounts focused on real estate
                    investment trusts.
                    In addition, his group conducted research in the area of structured
                    commercial
                    real estate debt (including Commercial Mortgage-Back Securities,
                    or “CMBS”), and
                    lead the creation of one of the earliest re-securitizations of
                    multiple CMBS
                    pool tranches into a Collateralized Debt Obligation vehicle.
                    In the ten years
                    prior to working at CB Richard Ellis, Mr. Hyland had worked as
                    a portfolio
                    manager or financial representative for several other investment
                    firms and
                    mutual funds. Mr. Hyland received his Chartered Financial Analyst
                    (“CFA”)
                    designation in 1994. From 1993 until 2003, Mr. Hyland was on
                    the Board of
                    Directors of the Security Analysts of San Francisco (“SASF”), a not-for-profit
                    organization of investment management professionals. He served
                    as the president
                    of the SASF from 2001-2002. Mr. Hyland is a member of the CFA
                    Institute
                    (formerly AIMR). He is also a member of the National Association
                    of Petroleum
                    Investment Analysts, a not-for-profit organization of investment
                    professionals
                    focused on the oil industry. He serves as an arbitrator for FINRA,
                    as part of
                    their dispute resolution program. He is a graduate of the University
                    of
                    California, Berkeley and received a BA in political science/international
                    relations in 1982. Mr. Hyland is 48 years old.
  Kathryn
                      D.
                      Rooney acts as a Marketing Manager and is employed by Ameristock
                      Corporation and ALPS Distributors, Inc.. Her primary responsibilities
                      include
                      soliciting orders, customers and customer funds. Currently,
                      Ms. Rooney is the
                      Director of Business Development for Ameristock Mutual Fund.
                      She has held this
                      position since September of 2003. Prior to working for Ameristock
                      Mutual Fund,
                      Ms. Rooney was the Regional Director for Accessor Capital Management
                      from
                      November of 2002 to September of 2003. Before working at Accessor
                      Capital
                      Management, Ms. Rooney worked at ALPS Mutual Fund Services,
                      Inc. as a National
                      Sales Director. She held this position from May of 1999 through
                      November of
                      2002. Before working at ALPS Mutual Fund Services, Inc., Ms.
                      Rooney worked as a
                      Trust Officer for Fifth Third Bank from June of 1994 through
                      May of 1999. Ms.
                      Rooney is 35 years old.
  74
 The
                  following individuals serve as independent directors of the General
                  Partner.
 
 Peter
                  M.
                  Robinson has been an Independent Director of the General Partner
                  since
                  September 30, 2005 and, as such, serves on the board of directors
                  of the General
                  Partner, which acts on behalf of USOF, USNG, US12OF and USG and will
                  serve on behalf of US12NG and USHO, if such funds commence operations. Mr.
                  Robinson has been employed as a Research Fellow with the Hoover
                  Institution
                  since 1993. Mr. Robinson graduated from Dartmouth College in 1979
                  and Oxford
                  University in 1982. Mr. Robinson spent six years in the White House,
                  serving
                  from 1982 to 1983 as chief speechwriter to Vice President George
                  Bush and from
                  1983 to 1988 as special assistant and speechwriter to President
                  Ronald Reagan.
                  After the White House, Mr. Robinson received an MBA from the Stanford
                  University
                  Graduate School of Business. Mr. Robinson then spent a year in
                  New York City
                  with Fox Television. He spent a second year in Washington, D.C.,
                  with the SEC,
                  where he served as the director of the Office of Public Affairs,
                  Policy
                  Evaluation, and Research. Mr. Robinson has also written three books
                  and has been
                  published in the New York
                  Times, Red Herring, and Forbes
                  ASAP and he is the
                  editor of Can Congress
                  Be
                  Fixed?: Five Essays on Congressional Reform (Hoover Institution Press,
                  1995). Mr. Robinson is 50 years old.
 
 Gordon
                  L.
                  Ellis has been an Independent Director of the General Partner
                  since
                  September 30, 2005 and, as such, serves on the board of directors
                  of the General
                  Partner, which acts on behalf of USOF, USNG, US12OF and USG and will
                  serve on behalf of US12NG and USHO, if such funds commence operations. Mr.
                  Ellis has been Chairman of International Absorbents, Inc. since
                  July 1988,
                  President and Chief Executive Officer since November 1996 and a
                  Class I Director
                  of the company since July 1985. Mr. Ellis is also a director of
                  Absorption
                  Corp., International Absorbents, Inc.’s wholly-owned subsidiary. Mr. Ellis is a
                  director/trustee of Polymer Solutions, Inc., a former publicly-held
                  company that
                  sold all of its assets effective as of February 3, 2004 and is
                  currently winding
                  down its operations and liquidating following such sale. Mr. Ellis
                  is a
                  professional engineer with an MBA in international finance. Mr.
                  Ellis is 60
                  years old.
 
 Malcolm
                  R. Fobes
                  III has been an Independent Director of the General Partner
                  since
                  September 30, 2005 and, as such, serves on the board of directors
                  of the General
                  Partner, which acts on behalf of USOF, USNG, US12OF and USG and will
                  serve on behalf of US12NG and USHO, if such funds commence operations. Mr.
                  Fobes is the founder, Chairman and Chief Executive Officer of Berkshire
                  Capital
                  Holdings, Inc., a California-based investment adviser registered
                  under the
                  Advisers Act, that has been sponsoring and providing portfolio
                  management
                  services to mutual funds since 1997. Since 1997, Mr. Fobes has
                  been the Chairman
                  and President of The Berkshire Funds, a mutual fund investment
                  company
                  registered under the 1940 Act. Mr. Fobes also serves as portfolio
                  manager of the
                  Berkshire Focus Fund, a mutual fund registered under the 1940 Act,
                  which
                  concentrates its investments in the electronic technology industry.
                  From April
                  2000 to July 2006, Mr. Fobes also served as co-portfolio manager
                  of The Wireless
                  Fund, a mutual fund registered under the 1940 Act, which concentrates
                  its
                  investments in companies engaged in the development, production,
                  or distribution
                  of wireless-related products or services. In these roles, Mr. Fobes
                  has gained
                  extensive experience in evaluating and retaining third-party service
                  providers,
                  including custodians, accountants, transfer agents, and distributors.
                  Mr. Fobes
                  was also contributing editor of Start a Successful Mutual Fund:
                  The Step-by-Step
                  Reference Guide to Make It Happen (JV Books, 1995). Prior to forming
                  Berkshire
                  Capital Holdings, Inc., Mr. Fobes was employed by various technology-related
                  companies, including Adobe Systems, Inc., a leading provider of
                  digital
                  publishing and imaging software technologies. Mr. Fobes holds a
                  B.S. degree in
                  Finance and Economics from San Jose State University in California.
                  Mr. Fobes is
                  43 years old.
 
 The
                  following are individual principals, as that term is defined in
                  CFTC Rule 3.1,
                  for the General Partner: Melinda Gerber, the Gerber Family Trust,
                  Howard Mah,
                  Andrew Ngim, Robert Nguyen, Peter Robinson, Gordon Ellis, Malcolm
                  Fobes, John
                  Love, and John Hyland. These individuals are principals due to
                  their positions,
                  however, Nicholas Gerber and Melinda Gerber are also principals
                  due to their
                  controlling stake in Wainwright. None of the principals owns or
                  has any other
                  beneficial interest in USOF. Nicholas Gerber and John Hyland make
                  trading and
                  investment decisions for USOF. Nicholas Gerber, John Love, and
                  John Hyland
                  execute trades on behalf of USOF. In addition, Nicholas Gerber,
                  John Love, John
                  Hyland, Kathryn Rooney and Robert Nguyen are registered with the CFTC as
                  Associated Persons of the General Partner and are associate members
                  of the
                  NFA.
  Audit
                  Committee
 
 The
                  General Partner has an audit committee which is made up of the
                  three independent
                  directors (Peter M. Robinson, Gordon L. Ellis, and Malcolm R. Fobes
                  III). The
                  audit committee is governed by an audit committee charter that
                  is posted on
                  USOF’s website. The
                  Board
                  has not made a determination as to whether any of the members of
                  the audit
                  committee may be considered to be an “Audit Committee Financial Expert” as such
                  term is defined in Item 407(d)(5) of Regulation S-K. However, the
                  Board believes
                  that Messrs. Fobes and Ellis are able to read and understand financial
                  statements and meet the financial sophistication requirements of
                  the AMEX and
                  applicable FINRA rules as they relate to audit committees. As such,
                  given the
                  limited scope of USOF’s activities and the qualifications and experience of all
                  of the members of the audit committee, the board of directors does
                  not believe
                  it is necessary to designate a member of the audit committee as
                  an “Audit
                  Committee Financial Expert.”
 
 Other
                  Committees
 
 Since
                  the
                  individuals who perform work on behalf of USOF are not compensated
                  by USOF, but
                  instead by the General Partner, Ameristock or ALPS Distributors,
                  Inc., USOF does
                  not have a compensation committee. Similarly, since the Directors
                  noted above
                  serve on the board of directors of the General Partner, there is
                  no nominating
                  committee of the board of directors that acts on behalf of USOF.
 75
 
 Code
                    of Ethics
 
 The
                      General Partner of USOF has adopted a Code of Business Conduct
                      and Ethics (the
“Code of Ethics”) that applies to its principal executive officer, principal
                      financial officer, principal accounting officer or controller,
                      or persons
                      performing similar functions, and also to USOF, US12OF, USNG,
                      USG, USHO and
                      US12NG.  USOF has posted the text of the Code of Ethics on its website
                      at www.unitedstatesoilfund.com.  USOF intends to disclose any
                      amendments or waivers to the Code of Ethics applicable to the
                      General Partner’s
                      principal executive officer, principal financial officer, principal
                      accounting
                      officer or controller, or persons performing similar functions,
                      on its website.
                      A copy of the Code of Ethics has been filed with the SEC.
  Item 11.
                      Executive
                          Compensation.
  Compensation
                  to the General Partner
                  and Other Compensation.
  USOF
                  does
                  not directly compensate any of the executive officers noted above. The
                  executive officers noted above are compensated by the General Partner for
                  the work they perform on behalf of USOF and other entities controlled
                  by the
                  General Partner. USOF does not reimburse the General Partner, nor
                  does it set
                  the amount or form of any portion of the compensation paid to the
                  executive
                  officers by the General Partner. USOF pays fees to the General
                  Partner pursuant
                  to the LP Agreement under which the fund is obligated to pay the General
                  Partner an annualized fee of 0.50% of average daily net assets
                  of USOF for the
                  first $1,000,000,000 and 0.20% of average daily net assets of USOF
                  for amounts
                  above $1,000,000,000. For 2007, USOF paid the General Partner aggregate
                  fees of
                  $3,622,613.
  Director
                  Compensation
 
 The
                  following table sets forth compensation earned during the year
                  ended
                  December 31, 2007, by the Directors of the General
                  Partner.
 Change
                                inPensionValue
                                andFees
                            
                            
                            
                            
                            
                            
                            
                            NonqualifiedEarned
                                or
                            
                            
                            
                            
                            
                            Non-Equity
                            
                            DeferredPaid
                                in
                            
                            Stock
                            
                            Option
                            
                            Incentive
                                Plan
                            
                            Compensation
                            
                            All
                                OtherName
                            
                            Cash
                            
                            Awards
                            
                            Awards
                            
                            Compensation
                            
                            Plan
                            
                            Compensation
                                (1)
                            
                            TotalManagement
                                DirectorsNicholas
                                Gerber
                            
                            $
                            0
                            
                            
                            NA
                            
                            
                            NA
                            
                            
                            NA
                            
                            $
                            0
                            
                            $
                            0
                            
                            $
                            0Andrew
                                F. Ngim
                            
                            $
                            0
                            
                            
                            NA
                            
                            
                            NA
                            
                            
                            NA
                            
                            $
                            0
                            
                            $
                            0
                            
                            $
                            0Howard
                                Mah
                            
                            $
                            0
                            
                            
                            NA
                            
                            
                            NA
                            
                            
                            NA
                            
                            $
                            0
                            
                            $
                            0
                            
                            $
                            0Robert
                                L. Nguyen
                            
                            $
                            0
                            
                            
                            NA
                            
                            
                            NA
                            
                            
                            NA
                            
                            $
                            0
                            
                            $
                            0
                            
                            $
                            0Independent
                                DirectorsPeter
                                M. Robinson
                            
                            $
                            0
                            
                            
                            NA
                            
                            
                            NA
                            
                            
                            NA
                            
                            $
                            0
                            
                            $
                            89,000
                            
                            $
                            89,000Gordon
                                L. Ellis
                            
                            $
                            0
                            
                            
                            NA
                            
                            
                            NA
                            
                            
                            NA
                            
                            $
                            0
                            
                            $
                            88,000
                            
                            $
                            88,000Malcolm
                                R. Fobes III
                            
                            $
                            0
                            
                            
                            NA
                            
                            
                            NA
                            
                            
                            NA
                            
                            $
                            0
                            
                            $
                            109,000
                            
                            $
                            109,000
 (1)
                  Payments made under this column represent cash payments made in
                  lieu of
                  directors’ and officers’ insurance coverage. Such payments were made only to the
                  Independent Directors of the General Partner for their service
                  on the boards of
                  USOF, USNG and US12OF.
 76
 
 Item 12.
                      Security
                          Ownership of Certain
                          Beneficial Owners and Management and Related Stockholder
                          Matters.
 
 None
                of
                the directors or executive officers of the General Partner, nor the
                employees of
                USOF own any units of USOF. In addition, USOF is not aware of any 5% holder
                of its units.
  Item 13.
                      Certain
                          Relationships and
                          Related Transactions, and Director
                          Independence.
  USOF
                has and will continue to have certain
                relationships with the General Partner and its affiliates. However, there
                have been no direct financial transactions between USOF and the directors
                or
                officers of the General Partner that have not been disclosed herein. See
                "Item 11. Executive Compensation" and "Item 12. Security Ownership
                of Certain
                Beneficial Owners and Management and Related Stockholder Matters."
                Any
                transaction with a related person that must be disclosed in accordance
                with SEC
                Regulation S-K item 404(a), including financial transactions by USOF
                with
                directors or executive officers of the General Partner or holders
                of beneficial
                interests in the General Partner or USOF of more than 5%, will be
                subject to the
                provisions regarding "Resolutions of Conflicts of Interest; Standard
                of Care" as
                set forth in Section 7.7 of the LP Agreement and will be reviewed
                and approved
                by the audit committee of the General Partner.
  Item 14.
                      Principal
                          Accountant Fees and
                          Services.
  During
                  the year ended December 31, 2007, the General Partner made the
                  following
                  payments to its independent auditors:
 2007
                        
                        
                        2006Audit
                            fees
                        
                        $
                        100,000
                        
                        $
                        159,000Audit-related
                            fees
                        
                        
                        -
                        
                        
                        -Tax
                            fees
                        
                        
                        6,300
                        
                        
                        -All
                            other fees
                        
                        
                        -
                        
                        
                        -$
                        106,300
                        
                        $
                        159,000
  Audit
                  fees consist of fees paid to Spicer Jeffries LLP for (i) the audit of
                  USOF’s annual financial statements included in the Annual Report on
                  Form 10-K,
                  and review of financial statements included in the Quarterly Reports
                  on
                  Form 10-Q and filed on USOF's current reports on Form 8-K; and
                  (ii) services
                  that are normally provided by the Independent Registered Public
                  Accountants in
                  connection with statutory and regulatory filings of registration
                  statements.
  Tax
                  fees
                  consist of fees paid to Spicer Jeffries LLP for professional services
                  rendered
                  in connection with tax compliance and partnership income tax return
                  filings.
  The
                  audit
                  committee has established policies and procedures which are intended
                  to control
                  the services provided by USOF’s independent auditors and to monitor their
                  continuing independence.  Under these policies and procedures, no
                  audit or permitted non-audit services (including fees and terms
                  thereof), except
                  for the de minimis
                  exceptions for non-audit services described in Section 10A(i)(1)(B)
                  of the
                  Exchange Act, may be undertaken by USOF’s independent auditors unless the
                  engagement is specifically pre-approved by the audit committee.  The
                  audit committee may form and delegate authority to subcommittees
                  consisting of
                  one or more members when appropriate, including the authority to
                  grant
                  pre-approvals of audit and permitted non-audit services, provided
                  that decisions
                  of such subcommittee to grant pre-approvals must be presented to
                  the full audit
                  committee at its next scheduled meeting.
 77
 Part
                IV
 Item 15.
                          Exhibits
                              and Financial
                              Statement
                              Schedules.
 1.
                        See
                            Index to Financial Statements on page 60.2.
                        No
                            financial statement schedules are filed herewith because
                            (i) such
                            schedules are not required or (ii) the information required
                            has been
                            presented in the aforementioned financial statements.3.
                        Exhibits
                            required to be filed by Item 601 of Regulation
                            S-K.
 
 Exhibit
                  Index
  Listed
                  below are the exhibits which are filed or furnished as part of
                  this report on
                  Form 10-K (according to the number assigned to them in Item 601
                  of Regulation
                  S-K):
 Exhibit
                                Number
                            
                            Description
                                of
                                Document3.1*
                            
                            Fourth
                                Amended and
                                Restated Agreement of Limited Partnership.3.2**
                            
                            Certificate
                                of Limited
                                Partnership of the Registrant.10.1***
                            
                            Form
                                of Initial
                                Authorized Purchaser Agreement.10.2****
                            
                            Form
                                of Marketing
                                Agent Agreement.10.3***
                            
                            Form
                                of Custodian
                                Agreement.10.4***
                            
                            Form
                                of Administrative
                                Agency Agreement.10.5*****
                            
                            License
                              Agreement.14.1******
                            
                            Code
                              of Ethics.23.1******
                            
                            Consent
                              of Independent Registered Public Accounting
                              Firm.
  31.1******
                          
                          Certification
                              of Principal Executive Officer Pursuant to
                              Rule 13a-14(a) under the Securities Exchange Act of
                              1934.31.2******
                          
                          Certification
                              of Principal Financial Officer Pursuant to
                              Rule 13a-14(a) under the Securities Exchange Act of
                              1934.32.1*******
                          
                          Certification
                              of Principal Executive Officer Pursuant to
                              Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.
                              S. C.
                              1350).32.2*******
                          
                          Certification
                              of Principal Financial Officer Pursuant to
                              Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.
                              S. C.
                              1350).
 *
                            Incorporated
                                by reference to Registrant’s Current Report on Form 8-K filed on
                                November 15, 2007.
 **
                            Incorporated
                                by reference to Registrant’s Registration Statement on Form S-1 (File No.
                                333-124950) filed on May 16, 2005.
 ***
                            Incorporated
                                by reference to Registrant’s Pre-Effective Amendment No. 5 to the
                                Registration Statement on Form S-1 (File No. 333-124950)
                                filed on March
                                13, 2006.
 ****
                            Incorporated
                                by reference to Registrant’s Pre-Effective Amendment No. 7 to the
                                Registration Statement on Form S-1 (File No. 333-124950)
                                filed on April 7,
                                2006.
 *****
                            Incorporated
                                by reference to United States Natural Gas Fund, LP’s Quarterly Report on
                                Form 10-Q for the Quarter ended March 31, 2007, filed
                                on June 1, 2007.
 ******
                            Filed
                                herewith.
 *******
                            Furnished
                                herewith.
 78
 SIGNATURES
  Pursuant
                to the requirements of Section 13 or 15(d) of the Securities Exchange
                Act of
                1934, the registrant has duly caused this Report to be signed on
                its behalf by
                the undersigned, thereunto duly authorized.
  United
                          States Oil Fund, LP (Registrant)
                        By:
                          Victoria Bay Asset Management, LLC, its general partner/s/
                          Nicholas GerberNicholas
                          D.
                          GerberChief
                          Executive Officer ofVictoria
                          Bay Asset
                          Management, LLC
                        (Principal
                          executive
                          officer)DateDate:
                          March 17, 2008/s/
                        Howard
                        MahHoward
                          MahChief
                          Financial Officerof
                          Victoria Bay
                          Asset Management, LLC
                        (Principal
                          financial and
                          accounting officer)DateDate:
                          March 17, 2008
 
 79
  Pursuant
                to the requirements of
                the Securities Exchange Act of 1934, this Report has been signed
                below by the
                following persons on behalf of the Registrant in the capacities and
                on the dates
                indicated.
 Signature
                          Title
                              (Capacity)
                          Date/s/
                            Nicholas D.
                            Gerber
                          Management
                              Director
                          March
                              17,
                              2008Nicholas
                            D.
                            Gerber/s/
                            Howard
                            Mah
                          Management
                              Director
                          March
                              17,
                              2008Howard
                            Mah/s/
                            Andrew
                            Ngim
                          Management
                              Director
                          March
                              17,
                              2008Andrew
                            Ngim/s/
                            Robert
                            Nguyen
                          Management
                              Director
                          March
                              17,
                              2008Robert
                            Nguyen/s/
                            Peter M.
                            Robinson
                          Independent
                              Director
                          March 17,
                              2008Peter
                              M. Robinson/s/
                              Gordon L.
                              Ellis
                          Independent
                              Director
                          March 17,
                                2008Gordon
                              L. Ellis/s/
                            Malcolm R. Fobes
                            III
                          Independent
                              Director
                          March 17,
                                2008Malcolm
                              R. Fobes III
  80