UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C. 20549


FORM
10-Q




x
            Quarterly
      report pursuant to Section 13 or 15(d) of the Securities Exchange Act
      of 1934 for the quarterly period ended March 31,
  2009.


OR


 ̈
            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 of
              incorporation
      or organization)
            
            (I.R.S.
      Employer
              Identification
      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)





N/A


(Former
name, former address and former fiscal year, if changed since last
report)




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 whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such files).


 ̈
Yes     ̈ No





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 the definitions of “large accelerated filer,”
“accelerated filer” and “smaller reporting company” in Rule 12b-2 of the
Exchange Act.




Large
      accelerated filer   x
            Accelerated
      filer    ̈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 Exchange Act).





 ̈
Yes    x No









UNITED
STATES OIL FUND, LP





Table
of Contents





Part
      I. FINANCIAL INFORMATION
            
            PageItem
      1. Condensed Financial Statements.
            
            1Item
      2. Management’s Discussion and Analysis of Financial Condition and Results
      of Operations.
            
            14Item
      3. Quantitative and Qualitative Disclosures About Market
    Risk.
            
            29Item
      4. Controls and Procedures.
            
            31Part
      II. OTHER INFORMATIONItem
      1. Legal Proceedings.
            
            32Item
      1A. Risk Factors.
            
            32Item
      2. Unregistered Sales of Equity Securities and Use of
      Proceeds.
            
            32Item
      3. Defaults Upon Senior Securities.
            
            32Item
      4. Submission of Matters to a Vote of Security Holders.
            
            32Item
      5. Other Information.
            
            32Item
      6. Exhibits.
            
            32










Part I.  FINANCIAL
INFORMATION




Item 1. Condensed Financial
Statements.




Index
to Condensed Financial Statements





Documents
            
            PageCondensed
      Statements of Financial Condition at March 31, 2009 (Unaudited) and
      December 31, 2008
            
            2Condensed
      Schedule of Investments (Unaudited) at March 31, 2009
            
            3Condensed
      Statements of Operations (Unaudited) for the three months ended March 31,
      2009 and 2008
            
            4Condensed
      Statement of Changes in Partners’ Capital (Unaudited) for the three months
      ended March 31, 2009
            
            5Condensed
      Statements of Cash Flows (Unaudited) for the three months ended March 31,
      2009 and 2008
            
            6Notes
      to Condensed Financial Statements for the three months ended March
      31, 2009 (Unaudited)
            
            7





1





United
      States Oil Fund, LPCondensed
      Statements of Financial ConditionAt
      March 31, 2009 (Unaudited) and December 31,
2008




March
      31, 2009
            
            
            December
      31, 2008AssetsCash
      and cash equivalents
            
            $
            2,246,069,990
            
            
            $
            1,025,376,289Equity
      in UBS Securities LLC trading accounts:Cash
            
            
            534,739,670
            
            
            
            1,356,466,032Unrealized
      gain on open commodity futures contracts
            
            
            187,512,250
            
            
            
            97,616,100Receivable
      for units sold
            
            
            -
            
            
            
            90,984,366Interest
      receivable
            
            
            721,465
            
            
            
            351,735Other
      assets
            
            
            1,418,095
            
            
            
            696,590Total
      assets
            
            $
            2,970,461,470
            
            
            $
            2,571,491,112Liabilities
      and Partners' CapitalGeneral
      Partner management fees (Note 3)
            
            $
            1,305,280
            
            
            $
            513,420Payable
      for units redeemed
            
            
            55,512,230
            
            
            
            -Brokerage
      commission fees payable
            
            
            194,386
            
            
            
            180,086Investment
      payable
            
            
            94,423
            
            
            
            -Other
      liabilities
            
            
            506,043
            
            
            
            1,173,675Total
      liabilities
            
            
            57,612,362
            
            
            
            1,867,181Commitments and Contingencies(Notes 3, 4 and 5)Partners'
      CapitalGeneral Partner
            
            
            -
            
            
            
            -Limited Partners
            
            
            2,912,849,108
            
            
            
            2,569,623,931Total
      Partners' Capital
            
            
            2,912,849,108
            
            
            
            2,569,623,931Total
      liabilities and partners' capital
            
            $
            2,970,461,470
            
            
            $
            2,571,491,112Limited
      Partners' units outstanding
            
            
            99,200,000
            
            
            
            74,900,000Net
      asset value per unit
            
            $
            29.36
            
            
            $
            34.31Market
      value per unit
            
            $
            29.05
            
            
            $
            33.10See
      accompanying notes to condensed financial statements.




2




United
      States Oil Fund, LPCondensed
      Schedule of Investments (Unaudited)At
      March 31, 2009Open
      Futures Contracts




Gain
      on Open
              
              
              %
      ofNumber
      of
              
              
              Commodity
              
              
              Partners'Contracts
              
              
              Contracts
              
              
              CapitalForeign
      ContractsCrude
      Oil Futures contracts, expire May 2009
              
              
              27,112
              
              
              $
              81,494,480
              
              
              
              2.80United
      States ContractsCrude
      Oil Futures contracts, expire May 2009
              
              
              31,548
              
              
              
              106,017,770
              
              
              
              3.6458,660
              
              
              
              187,512,250
              
              
              
              6.44Cash
      EquivalentsCost
              
              
              Market
      ValueUnited
      States - Money Market FundsFidelity
      Institutional Government Portfolio – Class I
              
              $
              650,191,384
              
              
              
              650,191,384
              
              
              
              22.32Goldman
      Sachs Financial Square Funds - Government Fund
              
              
              711,626,796
              
              
              
              711,626,796
              
              
              
              24.43Morgan
      Stanley Institutional Liquidity Fund – Government
Portfolio
              
              
              500,252,309
              
              
              
              500,252,309
              
              
              
              17.17$
              1,862,070,489
              
              
              
              1,862,070,489
              
              
              
              63.92Cash
              
              
              
              
              
              
              383,999,501
              
              
              
              13.18Total
      Cash and Cash Equivalents
              
              
              
              
              
              
              2,246,069,990
              
              
              
              77.10Cash
      on deposit with broker
              
              
              
              
              
              
              534,739,670
              
              
              
              18.36Liabilities,
      less receivables and other assets
              
              
              
              
              
              
              (55,472,802
              )
              
              
              (1.90
              )Total
      Partners' Capital
              
              
              
              
              
              $
              2,912,849,108
              
              
              
              100.00See
      accompanying notes to condensed financial statements.




3




United
      States Oil Fund, LPCondensed
      Statements of Operations (Unaudited)For
      the three months ended March 31, 2009 and
2008




Three
      months ended
            
            
            Three
      months endedMarch
      31, 2009
            
            
            March
      31, 2008IncomeGains
      (losses) on trading of commodity futures contracts:Realized
      gains (losses) on closed positions
            
            $
            (338,951,000
            )
            
            $
            76,827,790Change
      in unrealized gains (losses) on open positions
            
            
            89,896,150
            
            
            
            (49,054,490
            )Interest
      income
            
            
            1,839,120
            
            
            
            2,895,300Other
      income
            
            
            156,000
            
            
            
            89,000Total
      income (loss)
            
            
            (247,059,730
            )
            
            
            30,757,600ExpensesGeneral
      Partner management fees (Note 3)
            
            
            3,576,438
            
            
            
            530,931Brokerage
      commissions
            
            
            1,793,482
            
            
            
            238,589Other
      expenses
            
            
            996,565
            
            
            
            576,263Total
      expenses
            
            
            6,366,485
            
            
            
            1,345,783Net
      income (loss)
            
            $
            (253,426,215
            )
            
            $
            29,411,817Net
      income (loss) per limited partnership unit
            
            $
            (4.95
            )
            
            $
            5.51Net
      income (loss) per weighted average limited partnership
unit
            
            $
            (2.25
            )
            
            $
            5.31Weighted
      average limited partnership units outstanding
            
            
            112,874,444
            
            
            
            5,534,066See
      accompanying notes to condensed financial statements.




4




United States Oil Fund, LPCondensed
      Statement of Changes in Partners' Capital (Unaudited)For
      the three months ended March 31,
2009




General
      Partner
            
            
            Limited
      Partners
            
            
            TotalBalances,
      at December 31, 2008
            
            $
            -
            
            
            $
            2,569,623,931
            
            
            $
            2,569,623,931Addition
      of 111,900,000 partnership units
            
            
            -
            
            
            
            3,191,289,626
            
            
            
            3,191,289,626Redemption
      of 87,600,000 partnership units
            
            
            -
            
            
            
            (2,594,638,234
            )
            
            
            (2,594,638,234
            )Net
      loss
            
            
            -
            
            
            
            (253,426,215
            )
            
            
            (253,426,215
            )Balances,
      at March 31, 2009
            
            $
            -
            
            
            $
            2,912,849,108
            
            
            $
            2,912,849,108Net
      Asset Value Per UnitAt
      December 31, 2008
            
            $
            34.31At
      March 31, 2009
            
            $
            29.36See
      accompanying notes to condensed financial statements.




5




United States Oil Fund, LPCondensed
      Statements of Cash Flows (Unaudited)For
      the three months ended March 31, 2009 and
2008




Three
      months
            
            
            Three
      monthsended
              March
      31, 2009
            
            
            ended
              March
      31, 2008Cash
      Flows from Operating Activities:Net
      income (loss)
            
            $
            (253,426,215
            )
            
            $
            29,411,817Adjustments
      to reconcile net income (loss) to net cash provided by operating
      activities:Decrease
      in commodity futures trading account – cash
            
            
            821,726,362
            
            
            
            22,967,099Unrealized
      (gains) losses on futures contracts
            
            
            (89,896,150
            )
            
            
            49,054,490Decrease
      (increase) in interest receivable and other assets
            
            
            (1,091,235
            )
            
            
            750,282Increase
      (decrease) in management fees payable
            
            
            791,860
            
            
            
            (50,493
            )Increase
      (decrease) in commissions payable
            
            
            14,300
            
            
            
            (4,000
            )Increase
      (decrease) in other liabilities
            
            
            (573,209
            )
            
            
            280,438Net
      cash provided by operating activities
            
            
            477,545,713
            
            
            
            102,409,633Cash
      Flows from Financing Activities:Subscription
      of partnership units
            
            
            3,282,273,992
            
            
            
            2,341,916,582Redemption
      of partnership units
            
            
            (2,539,126,004
            )
            
            
            (2,232,156,555
            )Net
      cash provided by financing activities
            
            
            743,147,988
            
            
            
            109,760,027Net
      Increase in Cash and Cash Equivalents
            
            
            1,220,693,701
            
            
            
            212,169,660Cash and Cash
      Equivalents, beginning of period
            
            
            1,025,376,289
            
            
            
            354,816,049Cash and Cash
      Equivalents, end of period
            
            $
            2,246,069,990
            
            
            $
            566,985,709See
      accompanying notes to condensed financial statements.




6




United
States Oil Fund, LP


Notes
to Condensed Financial Statements


For
the three months ended March 31, 2009 (Unaudited)




NOTE
1 - ORGANIZATION AND BUSINESS




The
United States Oil Fund, LP (“USOF”) was organized as a limited partnership under
the laws of the state of Delaware on May 12, 2005. USOF is a commodity pool that
issues units that may be purchased and sold on the NYSE Arca, Inc. (the “NYSE
Arca”). Prior to November 25, 2008, USOF’s units traded 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 Fifth
Amended and Restated Agreement of Limited Partnership dated as of October 13,
2008 (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 become, over a 4-day period, the next month contract to expire, less
USOF’s expenses. USOF accomplishes 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 March 31, 2009, USOF held 31,548 Oil Futures
Contracts traded on the NYMEX and 27,112 Oil Futures Contracts traded on the ICE
Futures.





USOF
commenced investment operations on April 10, 2006 and has a fiscal year ending
on December 31. United States Commodity Funds LLC (formerly known as 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
registered with the Commodity Futures Trading Commission effective December 1,
2005. The General Partner is also the general partner of the United States
Natural Gas Fund, LP (“USNG”), the United States 12 Month Oil Fund, LP
(“US12OF”), the United States Gasoline Fund, LP (“UGA”) and the United States
Heating Oil Fund, LP (“USHO”), which listed their limited partnership units on
the AMEX under the ticker symbols “UNG” on April 18, 2007, “USL” on
December 6, 2007, “UGA” on February 26, 2008 and “UHN” on April 9, 2008,
respectively. As a result of the acquisition of the AMEX by NYSE Euronext, each
of USNG’s, US12OF’s, UGA’s and USHO’s units commenced trading on the NYSE Arca
on November 25, 2008.





The
accompanying unaudited condensed financial statements have been prepared in
accordance with Rule 10-01 of Regulation S-X promulgated by the U.S. Securities
and Exchange Commission (the “SEC”) and, therefore, do not include all
information and footnote disclosure required under accounting principles
generally accepted in the United States of America. The financial
information included herein is unaudited, however, such financial information
reflects all adjustments which are, in the opinion of management, necessary for
the fair presentation of the condensed financial statements for the interim
period.





USOF
issues limited partnership interests (“units”) to certain authorized purchasers
(“Authorized Purchasers”) by offering baskets consisting of 100,000 units
(“Creation Baskets”) 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 the earlier of the close of the New York
Stock Exchange (the “NYSE”) or 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 or redeem one or more baskets
consisting of 100,000 units (“Redemption Baskets”). Units may be purchased
or sold on a nationally recognized securities exchange in smaller increments
than a Creation Basket or Redemption Basket. Units purchased or sold on a
nationally recognized securities exchange are not purchased or sold at the net
asset value of USOF but rather at market prices quoted on such
exchange.




7





In April
2006, USOF initially registered 17,000,000 units on Form S-1 with 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 $13,479,000.
USOF also commenced investment operations on April 10, 2006 by purchasing Oil
Futures Contracts traded on the NYMEX based on light, sweet crude
oil.  As of March 31, 2009, USOF had registered a total of 627,000,000
units.





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 condensed 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 condensed financial
statements. Changes in the unrealized gains or losses between periods are
reflected in the condensed statement of operations. USOF earns interest on
its assets denominated in U.S. dollars on deposit with the futures commission
merchant at the overnight Federal Funds Rate less 32 basis points. 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 or redeem Redemption Baskets only
in blocks of 100,000 units equal to the net asset value of the units determined
as of 4:00 p.m. New York time on the day the order is placed.




USOF
records units sold or redeemed one business day after the trade date of the
purchase or redemption. The amounts due from Authorized Purchasers are 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.




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’s
net asset value is calculated 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.




8




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 income (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 March 31, 2009.




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 funds and overnight deposits or time
deposits with original maturity dates of three months or less.





Use
of Estimates





The
preparation of condensed 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 condensed 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, through December 31, 2008, USOF was
contractually obligated to pay the General Partner a fee, which was paid monthly
and based on average daily net assets, that was equal to 0.50% per annum on
average daily net assets of $1,000,000,000 or less and 0.20% per annum on
average daily net assets that were greater than $1,000,000,000. As ofJanuary 1, 2009, this fee changed to 0.45% per annum on
all amounts of average daily net assets.




Ongoing
Registration Fees and Other Offering Expenses




USOFpays all costs and expenses
associated with the ongoing
registration of units subsequent to the initial offering.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 three month periods ended
March 31, 2009 and 2008, USOF incurred $453,200 and $105,629, respectively, in
registration fees and other offering expenses.




Directors’
Fees




USOF is
responsible for paying for its portion of the directors’ and officers’
liability insurance of the General Partner and the fees and expenses of the
independent directors of the General Partner who are also its audit
committee members. USOF shares these fees with USNG, US12OF, UGA and USHO
based on the relative assets of each fund, computed on a daily basis. These fees
for the calendar year 2009 are estimated to be a total of $477,000 for all
funds.




9





Licensing
Fees





As
discussed in Note 4, USOF entered into a licensing agreement with the NYMEX
on May 30, 2007. 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.  During the three month periods
ended March 31, 2009 and 2008, USOF incurred $198,364 and $41,367, respectively,
under this arrangement.





Investor
Tax Reporting Cost




The fees
and expenses associated with USOF’s audit expenses and tax accounting and
reporting requirements, with the exception of certain initial implementation
service fees and base service fees which were borne by the General Partner, are
paid by USOF.





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
are 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 are determined
by the parties from time to time.





Currently,
the General Partner pays BBH&Co. for its services, in the foregoing
capacities, a minimum amount of $75,000 annually for its custody, fund
accounting and fund administration services rendered to USOF and each of the
affiliated funds managed by the General Partner, as well as a $20,000 annual fee
for its transfer agency services. In addition, the General Partner pays
BBH&Co. an asset-based charge of (a) 0.06% for the first $500 million of
USOF’s, USNG’s, US12OF’s, UGA’s and USHO’s combined net assets, (b) 0.0465% for
USOF’s, USNG’s, US12OF’s, UGA’s and USHO’s combined net assets greater than $500
million but less than $1 billion, and (c) 0.035% once USOF’s, USNG’s, US12OF’s,
UGA’s and USHO’s combined net assets exceed $1 billion. The annual minimum
amount will not apply if the asset-based charge for all accounts in the
aggregate exceeds $75,000. The General Partner also pays transaction fees
ranging from $7.00 to $30.00 per transaction.





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
$7 per round-turn trade, plus applicable exchange and NFA fees for Oil Futures
Contracts and options on Oil Futures Contracts.




10





USOF
invests primarily in Oil Futures Contracts traded on the NYMEX. On May 30, 2007,
USOF and the NYMEX entered into a licensing 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 licensing 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.





NOTE
5 - FINANCIAL INSTRUMENTS, OFF-BALANCE SHEET RISKS AND
CONTINGENCIES





USOF engages
in the trading of futures contracts and options on 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.





USOF may
enter into futures contracts and options on futures contracts to gain exposure
to changes in the value of an underlying commodity. A futures contract obligates
the seller to deliver (and the purchaser to accept) the future delivery of a
specified quantity and type of a commodity at a specified time and place. The
contractual obligations of a buyer or seller may generally be satisfied by
taking or making physical delivery of the underlying 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
purchase and sale of futures contracts 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.





Futures
contracts involve, to varying degrees, elements of market risk (specifically,
commodity price risk) and exposure to loss in excess of the amount of variation
margin. The face or contract amounts reflect the extent of the total exposure
USOF has in the particular classes of instruments. Additional risks associated
with the use of futures contracts are an imperfect correlation between movements
in the price of the futures contracts and the market value of the underlying
securities and the possibility of an illiquid market for a futures
contract.





All of
the futures 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 its
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.





Fair
      Value of Derivative InstrumentsAsset
      DerivativesAs
      of March 31, 2009
            
            As
      of December 31, 2008Derivatives
      not
            Condensed
            
            
            
            CondensedAccounted
            Statement
      of
            
            
            
            Statement
      offor
      as Hedging
            Financial
            
            
            
            FinancialInstruments
      under
            Condition
            
            Unrealized
            
            Condition
            
            UnrealizedStatement
      133
            Location
            
            Appreciation
            
            Location
            
            AppreciationCommodity
      Contracts
            Assets
            
            $
            187,512,250
            *
            Assets
            
            $
            97,616,100*
      Includes cumulative appreciation/(depreciation) of futures contracts as
      reported on the Condensed Schedule of Investments.




11




The
      Effect of Derivative Instruments on the Condensed Statements of
      Operationsfor
      the three months ended March 31, 2009 and
2008




Change
      in
            
            
            
            
            
            Change
      inRealized
            
            
            Unrealized
            
            
            Realized
            
            
            UnrealizedDerivatives
      not
            Location
      of
            
            Gain
      or (Loss)
            
            
            Appreciation
      or
            
            
            Gain
      or (Loss)
            
            
            Appreciation
      orAccounted
            Gain
      or (Loss)
            
            on
      Derivatives
            
            
            (Depreciation)
            
            
            on
      Derivatives
            
            
            (Depreciation)for
      as Hedging
            on
      Derivatives
            
            Recognized
            
            
            Recognized
            
            
            Recognized
            
            
            RecognizedInstruments
      under
            Recognized
            
            in
      Income
            
            
            in
      Income
            
            
            in
      Income
            
            
            in
      IncomeStatement
      133
            in
      Income
            
            2009
            
            
            2009
            
            
            2008
            
            
            2008Commodity
      Contracts
            Realized
      gains (losses) on closed positions
            
            $
            (338,951,000
            )
            
            $
            —
            
            
            $
            76,827,790
            
            
            $
            —Change
      in unrealized gains (losses) on open positions
            
            
            —
            
            
            
            89,896,150
            
            
            
            —
            
            
            
            (49,054,490
            )




USOF’s
cash and other property, such as U.S. Treasuries, 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. The insolvency of a futures commission merchant could result in the
complete loss of USOF’s assets posted with that futures commission merchant;
however, the vast majority of USOF’s assets are held in Treasuries, cash and/or
cash equivalents with USOF’s custodian and would not be impacted by the
insolvency of a futures commission merchant. Also, the failure or insolvency of
USOF’s custodian could result in a substantial loss of USOF’s
assets.




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 March 31, 2009 and December 31, 2008, USOF had
deposits in domestic and foreign financial institutions, including cash
investments in money market funds, in the amounts of $2,780,809,660 and
$2,381,842,321, 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 or counterparty with which it
conducts business.




The
financial instruments held by USOF are reported in its condensed
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.




12





NOTE 6
– FAIR VALUE OF FINANCIAL INSTRUMENTS




Effective
January 1, 2008, USOF adopted FAS 157 – Fair Value Measurements (“FAS
157”).  FAS 157 defines fair value, establishes a framework for
measuring fair value in generally accepted accounting principles, and expands
disclosures about fair value measurement.  The changes to current
practice resulting from the application of FAS 157 relate to the definition of
fair value, the methods used to measure fair value, and the expanded disclosures
about fair value measurement. FAS 157 establishes a fair value hierarchy that
distinguishes between (1) market participant assumptions developed based on
market data obtained from sources independent of USOF (observable inputs) and
(2) USOF’s own assumptions about market participant assumptions developed based
on the best information available under the circumstances (unobservable inputs).
The three levels defined by the FAS 157 hierarchy are as follows:




Level I –
Quoted prices (unadjusted) in active markets for identical assets or
liabilities that the reporting entity has the ability to access at the
measurement date.




Level II
– Inputs other than quoted prices included within Level I that are observable
for the asset or liability, either directly or indirectly. Level II assets
include the following: quoted prices for similar assets or liabilities
in active markets, quoted prices for identical or similar assets or liabilities
in markets that are not active, inputs other than quoted prices that are
observable for the asset or liability, and inputs that are derived principally
from or corroborated by observable market data by correlation or other means
(market-corroborated inputs).




Level III
– Unobservable pricing input at the measurement date for the asset or liability.
Unobservable inputs shall be used to measure fair value to the extent that
observable inputs are not available.




In some
instances, the inputs used to measure fair value might fall in different levels
of the fair value hierarchy. The level in the fair value hierarchy within which
the fair value measurement in its entirety falls shall be determined based on
the lowest input level that is significant to the fair value measurement in its
entirety.




The
following table summarizes the valuation of USOF’s securities at March 31, 2009
using the fair value hierarchy:




At March
      31, 2009
            
            Total
            
            
            Level I
            
            
            Level II
            
            
            Level IIIInvestments
            
            $
            1,862,070,489
            
            
            $
            1,862,070,489
            
            
            $
            -
            
            
            $
            -Other
      Financial Instruments
            
            
            187,512,250
            
            
            
            187,512,250
            
            
            
            -
            
            
            
            -





NOTE 7
- FINANCIAL HIGHLIGHTS





The
following table presents per unit performance data and other supplemental
financial data for the three months ended March 31, 2009 and 2008 for the
limited partners. This information has been derived from information presented
in the condensed financial statements.





For
      the three months ended
            
            
            For
      the three months endedMarch
      31, 2009
            
            
            March
      31, 2008(Unaudited)
            
            
            (Unaudited)Per Unit Operating
      Performance:Net
      asset value, beginning of period
            
            $
            34.31
            
            
            $
            75.82Total
      income (loss)
            
            
            (4.89
            )
            
            
            5.75Total
      expenses
            
            
            (0.06
            )
            
            
            (0.24
            )Net
      increase (decrease) in net asset value
            
            
            (4.95
            )
            
            
            5.51Net
      asset value, end of period
            
            $
            29.36
            
            
            $
            81.33Total
      Return
            
            
            (14.43
            )%
            
            
            7.27
            %Ratios
      to Average Net AssetsTotal
      income (loss)
            
            
            (7.67
            )%
            
            
            7.20
            %Expenses
      excluding management fees*
            
            
            (0.35
            )%
            
            
            (0.77
            )%Management
      fees*
            
            
            (0.45
            )%
            
            
            (0.50
            )%Net
      income (loss)
            
            
            (7.86
            )%
            
            
            6.89
            %*Annualized




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.




13





Item 2.  Management’s
Discussion and Analysis of Financial Condition and Results of
Operations.




The
following discussion should be read in conjunction with the condensed financial
statements and the notes thereto of the United States Oil Fund, LP (“USOF”)
included elsewhere in this quarterly report on Form 10-Q.




Forward-Looking
Information




This
quarterly report on Form 10-Q, 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 the 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 quarterly report on Form
10-Q on information available to it on the date of this quarterly report on Form
10-Q, 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 U.S. Securities and Exchange Commission (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 NYSE Arca, Inc. (the “NYSE Arca”). The
investment objective of USOF is to have the changes in percentage terms of its
units’ net asset value (“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 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 it will become, over a 4-day period, the
futures contract that is 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 its NAV, measured
in percentage terms, will closely track the changes in the price of a
specified oil futures contract (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.




14





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 becomes, over a 4-day period, 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 futures contracts for 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 interests 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 quarterly report on Form 10-Q.





The
general partner of USOF, United States Commodity Funds LLC (formerly, Victoria
Bay Asset Management, LLC) (the “General Partner”), which is registered as
a commodity pool operator (“CPO”) with the U.S. Commodity Futures Trading
Commission (the “CFTC”), is authorized by the Fifth Amended and Restated
Agreement of Limited Partnership of USOF (the “LP Agreement”) to manage
USOF. The General Partner is authorized by
USOFin its sole judgment
to employ and establish the terms of employment for, and termination of,
commodity trading advisors or futures commission merchants.





Crude oil
futures prices were volatile during the three months ended March 31, 2009 and
exhibited wide daily swings along with an uneven upward trend from late February
2009 to late March 2009. The price of the Benchmark Oil Futures Contract started
the period at the $44.60 per barrel level. The low of the period was on
February 18, 2009 when prices dropped to $37.41 per barrel. Prices rose sharply
over the course of the period and hit a peak on March 26, 2009 of $54.34 per
barrel. The period ended with the Benchmark Oil Futures Contract at $49.66 per
barrel, up approximately 11.3% over the period. USOF’s NAV fell during the
period from a starting level of $34.31 per unit and a high on January 5, 2009 of
$37.54 per unit. USOF’s NAV reached its low for the period on February 18, 2009
at $22.88 per unit. USOF’s NAV on March 31, 2009 was $29.36,
down approximately 14.4% over the period. The Benchmark Oil Futures
Contract prices listed above begin with the February 2009 contract and end with
the May 2009 contract. The return of approximately 11.3% on the Benchmark Oil
Futures Contract listed above is a hypothetical return only and could not
actually be achieved by an investor holding futures contracts. An investment in
oil futures contracts would need to be rolled forward during the time period
described in order to achieve such a result.





For the
first half of 2008, the crude oil futures market remained in a state of
backwardation, meaning that the price of the near month crude oil futures
contract was typically higher than the price of the next month crude oil
futures contract, or contracts further away from expiration. For much of the
third quarter of 2008, the crude oil futures market moved back and forth between
a mild backwardation market and a mild contango market. A contango market is one
in which the price of the near month crude oil futures contract is less
than the price of the next month crude oil futures contract, or contracts
further away from expiration. From late November 2008 to the end of 2008, the
market moved into a much steeper contango market. During the first quarter of
2009, the crude oil market remained in contango. During parts of January and
February 2009, the level of contango was unusually steep, reflecting
that the cost of oil futures contracts further from expiration were
significantly higher than the near month oil futures contract. For a
discussion of the impact of backwardation and contango on total returns, see
“Term Structure of Crude Oil Prices and the Impact on Total
Returns”.





Valuation
of 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 New York Stock Exchange (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 NYSE typically closes at 4:00 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 contracts or other futures contracts, as of the earlier of
the close of the NYSE or 4:00 p.m. New York time.




15





Results
of Operations and the Crude Oil Market





Results of
Operations. On April 10, 2006, USOF listed its units on the
American Stock Exchange (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 $13,479,000 in cash. As a result of the acquisition of the
AMEX by NYSE Euronext, USOF’s units no longer trade on the AMEX and commenced
trading on the NYSE Arca on November 25, 2008.




Since its
initial offering of 17,000,000 units, USOF has made six 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, 100,000,000 units which were registered with the SEC on
February 7, 2008, 100,000,000 units which were registered with the SEC on
September 29, 2008 and 300,000,000 units which were registered with the SEC on
January 16, 2009. 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
March 31, 2009, USOF had issued 404,200,000 units, 99,200,000 of
which were outstanding.  As of March 31, 2009, there were
222,800,000 units registered but not yet issued.





More
units may have been issued by USOF than are outstanding due to the redemption of
units. Unlike funds that are registered under the Investment Company Act of
1940, as amended, units that have been redeemed by USOF cannot be resold by
USOF. As a result, USOF contemplates that additional offerings of its units will
be registered with the SEC in the future in anticipation of additional issuances
and redemptions.




For the Three Months Ended
March 31, 2009 Compared to the Three Months Ended March 31,
2008





As of
March 31, 2009, the total unrealized gain on Oil Futures Contracts owned or
held on that day was $187,512,250 and USOF established cash deposits, including
cash investments in money market funds, that were equal to $2,780,809,660.
The majority of USOF’s cash assets were held in overnight deposits at USOF’s
custodian bank, while 19.23% of the cash balance was held with the futures
commission merchant as margin deposits for the Oil Futures Contracts purchased.
The ending per unit NAV on March 31, 2009 was $29.36.





By
comparison, as of March 31, 2008, the total unrealized loss on Oil
Futures Contracts owned or held on that day was $13,349,470 and USOF established
cash deposits, including cash investments in money market funds, that were
equal to $630,349,360. The majority of USOF's cash assets were held in overnight
deposits at USOF’s custodian bank, while 10.05% of the cash balance was held
with the futures commission merchant as margin deposits for the Oil Futures
Contracts purchased. The ending per unit NAV on March 31, 2008 was $81.33. The
change in the per unit NAV for March 31, 2008 compared to March 31, 2009 was
primarily a result of sharply lower prices for crude oil and the related decline
in the value of the Oil Futures Contracts that USOF had invested in between the
period ended March 31, 2008 and the period ended March 31, 2009.




Portfolio Expenses. USOF pays
the General Partner a management fee of 0.45% of NAV on its average net assets.
The fee is accrued daily. Prior to January 1, 2009, the management fee was
0.50% for total net assets of up to $1 billion and the management fee was 0.20%
on the incremental amount of total net assets over $1 billion, and was accrued
daily.





During
the three month period ended March 31, 2009, the daily average total net assets
of USOF were $3,223,209,553. The management fee paid by USOF during
the period amounted to $3,576,438. Management fees as a percentage of total net
assets averaged 0.45% over the course of this three month period. By comparison,
during the three month period ended March 31, 2008, the daily average total net
assets of USOF were $427,078,224. During the three month period ended
March 31, 2008, the total net assets of USOF did not exceed $1 billion on
any day. The management fee paid by USOF for this three month period amounted to
$530,931, which was calculated at the 0.50% rate for total net assets up to and
including $1 billion and at the rate of 0.20% on average net assets over $1
billion, and accrued daily. Management fees as a percentage of total net assets
averaged 0.50% over the course of this three month period. Management fees as a
percentage of total net assets were lower for the three months ended March 31,
2009 compared to the three months ended March 31, 2008 due to the reduced
expense ratio schedule and due to the period ended March 31, 2008 having no days
in which total net assets exceeded $1 billion and therefore all total net assets
during that period were charged the higher daily rate of 0.50%.




16





In
addition to the management fee, USOF pays for all brokerage fees, taxes and
other expenses, including certain tax reporting costs, licensing fees for the
use of intellectual property, ongoing registration or other fees paid to the
SEC, the Financial Industry Regulatory Authority (“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. The total of these fees, taxes and expenses for
the three months ended March 31, 2009 was $2,790,047, as compared to $814,852
for the three months ended March 31, 2008. The increase in expenses from the
three months ended March 31, 2008 to the three months ended March 31, 2009 was
primarily due to the relative size of USOF and activity that resulted
from its increased size, including the registration and the offering of
additional units, increased brokerage fees, increased licensing fees and
increased tax reporting costs due to the greater number of unit holders during
the period. For the three months ended March 31, 2009, USOF incurred
$453,200 in fees and other expenses relating to the registration and offering of
additional units. By comparison, for the three months ended March 31, 2008, USOF
incurred $105,629 in ongoing registration fees and other expenses relating to
the registration and offering of additional units.





USOF is
responsible for paying for its portion of the directors’ and officers’ liability
insurance of the General Partner and the fees and expenses of the independent
directors of the General Partner who are also its audit committee
members. USOF shares these fees with the United States Natural Gas
Fund, LP (“USNG”), the United States 12 Month Oil Fund, LP (“US12OF”), the
United States Gasoline Fund, LP (“UGA”) and the United States Heating Oil Fund,
LP (“USHO”) based on the relative assets of each fund computed on a daily basis.
These fees for calendar year 2009 are estimated to be a total of $477,000 for
all funds. By comparison, for the year ended December 31, 2008, these fees
amounted to a total of $282,000 for all funds, and USOF’s portion of such fees
was $145,602. Directors’
expenses are expected to increase in 2009 due to payment for directors’ and
officers’ liability insurance and an increase in the compensation awarded to the
independent directors. Effective as of March 3, 2009, the General Partner has
obtained directors’ and officers’ liability insurance covering all of the
directors and officers of the General Partner. Previously, the General Partner
did not have liability insurance for its directors and officers; instead, the
independent directors received a payment in lieu of directors’ and officers’
insurance coverage.


USOF also
incurs commissions to brokers for the purchase and sale of Oil Futures
Contracts, Other Oil Interests or short-term obligations of the United
States of two years or less (“Treasuries”). During the three month period ended
March 31, 2009, total commissions paid to brokers amounted to $1,793,482. By
comparison, during the three month period ended March 31, 2008, total
commissions paid to brokers amounted to $238,589. The increase in the total
commissions paid to brokers was primarily a function of increased brokerage fees
due to a higher number of futures contracts being held and traded as a result of
the increase in USOF’s average total net assets, the decrease in the price of
Oil Futures Contracts and the increase in redemptions and creations of units
during the period.  The increase in assets required USOF to purchase a
greater number of Oil Futures Contracts and incur a larger amount of
commissions. As an annualized percentage of total net assets, the figure
for the three months ended March 31, 2009 represents approximately 0.23% of
total net assets. By comparison, the figure for the three months ended March 31,
2008 represented approximately 0.22% 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 and cash equivalents held with USOF’s
custodian bank. The Treasuries, cash and/or cash equivalents earn interest that
accrues on a daily basis. For the three month period ended March 31, 2009, USOF
earned $1,839,120 in interest income on such cash holdings. Based on USOF’s
average daily total net assets, this was equivalent to an annualized yield of
0.23%. USOF did not purchase Treasuries during the three month period ended
March 31, 2009 and held all of its funds in cash and/or cash equivalents during
this time period. By comparison, for the three month period ended March 31,
2008, USOF earned $2,895,300 in interest income on such cash holdings. Based on
USOF’s average daily total net assets, this is equivalent to an annualized yield
of 2.73%. USOF did not purchase Treasuries during the three month period
ended March 31, 2008 and held all of its funds in cash and/or cash equivalents
during this time period. Interest rates on short-term investments in the United
States, including cash, cash equivalents, and short-term Treasuries, were
sharply lower during the three month period ended March 31, 2009 compared to the
same time period in 2008. As a result, the amount of interest earned by USOF as
a percentage of total net assets was lower during the three month period ended
March 31, 2009.




17





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 in the price 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 Oil Futures
Contracts.





For the
30 valuation days ended March 31, 2009, the simple average daily change in the
Benchmark Oil Futures Contract was -0.030%, while the simple average daily
change in the NAV of USOF over the same time period
was   -0.032%. The average daily difference was -0.002% (or -0.2
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 -0.619%, meaning that over this time period USOF’s
tracking error was within the plus or minus 10% range established as its
benchmark tracking goal. The first chart below shows the daily movement of
USOF’s NAV versus the daily movement of the Benchmark Oil Futures Contract for
the 30-day period ended March 31, 2009.







*PAST PERFORMANCE IS NOT NECESSARILY
INDICATIVE OF FUTURE RESULTS




18













*PAST
PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS





Since the
offering of USOF units to the public on April 10, 2006 to March 31, 2009,
the simple average daily change in the Benchmark Oil Futures Contract was
-0.080%, while the simple average daily change in the NAV of USOF over the same
time period was -0.073%. The average daily difference was 0.007% (or 0.7 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 2.148%, 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
three month period ended March 31, 2009, the actual total return of USOF as
measured by changes in its NAV was -14.43%. This is based on an initial
NAV of $34.31 on December 31, 2008 and an ending NAV as of March 31,
2009 of $29.36. 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 the first quarter of 2009 with an estimated NAV of $29.40,
for a total return over the relevant time period of -14.30%. The difference
between the actual NAV total return of USOF of -14.43% and the expected total
return based on the Benchmark Oil Futures Contract of -14.30% was an error over
the time period of -0.13%, which is to say that USOF’s actual total return
trailed 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 net impact of the expenses and the
interest that USOF collects on its cash and cash equivalent holdings. During the
three month period ended March 31, 2009, USOF received interest income of
$1,839,120, which is equivalent to a weighted average interest rate of 0.23% for
the three month period ended March 31, 2009. In addition, during the three month
period ended March 31, 2009, USOF also collected $156,000 from brokerage firms
creating or redeeming baskets of units. This income also contributed to USOF’s
actual return. 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.
During the three month period ended March 31, 2009, USOF incurred total expenses
of $6,366,485. Income from interest and brokerage collections net of expenses
was $(4,371,365) which is equivalent to a weighted average net interest rate of
-0.55% for the three month period ended March 31, 2009.




19




By
comparison, for the three month period ended March 31, 2008, the actual total
return of USOF as measured by changes in its NAV was 7.27%. This was based on an
initial NAV of $75.82 on December 31, 2007 and an ending NAV as of
March 31, 2008 of $81.33. 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 the first quarter of 2008 with an estimated NAV of $81.01,
for a total return over the relevant time period of 6.86%. The difference
between the actual NAV total return of USOF of 7.27% and the expected total
return based on the Benchmark Oil Futures Contract of 6.86% was an error over
the time period of 0.41%, 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. During the three month period
ended March 31, 2008, USOF received interest income of $2,895,300, which is
equivalent to a weighted average interest rate of 2.73% for the three month
period ended March 31, 2009. In addition, during the three month period ended
March 31, 2008, USOF also collected $89,000 from brokerage firms creating or
redeeming baskets of units. During the three month period ended March 31, 2008,
USOF incurred total expenses of $1,345,783. Income from interest and brokerage
collections net of expenses was $1,638,517, which is equivalent to a weighted
average net interest rate of 1.54% for the three month period ended March 31,
2008. This income also contributed to USOF’s actual return exceeding the
benchmark results.





There are
currently three factors that have impacted 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 during which USOF executes the trade. In that case, USOF may pay 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 Benchmark Oil Futures Contract.
During the three month period ended March 31, 2009, management attempted to
minimize the effect of these transactions by seeking to execute its purchase or
sale of the Benchmark Oil Futures Contract 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 the Benchmark Oil Futures Contract 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 distributions to unitholders during the three
month period ended March 31, 2009. 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
Contract. During the three month period ended March 31, 2009, USOF earned, on an
annualized basis, approximately 0.23% on its cash holdings. It also incurred
cash expenses on an annualized basis of 0.45% for management fees and
approximately 0.23% in brokerage commission costs related to the purchase and
sale of futures contracts, and 0.12% for other expenses. The foregoing fees and
expenses resulted in a net yield on an annualized basis of approximately -0.57%
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. When short-term yields drop to a
level lower than the combined expenses of the management fee and the brokerage
commissions, then the tracking error becomes 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 Oil Futures Contract 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 Oil Futures Contract. During the three month
period ended March 31, 2009, USOF did not hold any Other Oil Interests.
However, there can be no assurance that in the future USOF will not make use of
such Other Oil Interests.




20





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 position in a near month contract 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 crude 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.




21





The chart
below compares the price of the near month contract to the average price of
the near 12 months over the last 10 years (1999-2008). When the price of
the near month contract is higher than the average price of the near 12 month
contracts, the market would be described as being in backwardation. When the
price of the near month contract is lower than the average price of the near 12
month contracts, the market would be described as being in contango. Although
the prices of the near month contract and the average price of the near 12 month
contracts do tend to move up or down together, it can be seen that at times the
near month prices are clearly higher than the average price of the near 12 month
contracts (backwardation), and other times they are below the average price of
the near 12 month contracts (contango).









*PAST
PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS




22





An
alternative way to view the same data is to subtract the dollar price of the
average dollar price of the near 12 month contracts from the dollar price
of the near month contract. If the resulting number is a positive number, then
the near month price is higher than the average price of the near 12 months and
the market could be described as being in backwardation. If the resulting number
is a negative number, then the near month price is lower than the average price
of the near 12 months and the market could be described as being in contango.
The chart below shows the results from subtracting the average dollar price of
the near 12 month contracts from the near month price for the
10 year period between 1999 and 2008.









*PAST
PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS




23





An
investment in a portfolio that involved owning only the near month contract
would likely produce a different result than an investment in a portfolio that
owned an equal number of each of the near 12 months’ worth of contracts.
Generally speaking, when the crude oil futures market is in backwardation, the
near 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 near month only portfolio. The chart below shows the annual results of
owning a portfolio consisting of the near month contract and a portfolio
containing the near 12 months’ worth of contracts. In addition, the chart shows
the annual change in the spot price of light sweet crude oil. In this example,
each month, the near month only portfolio would sell the near month contract at
expiration and buy the next month out contract. The portfolio holding an equal
number of the near 12 months’ worth of contracts would sell the near month
contract at expiration and replace it with the contract that becomes the new
twelfth month contract.




Historical
Data of Owning and Rolling the Near Month Light, Sweet Oil
Contract
 versus
the Near 12 Month Contracts and versus the Annual Change in the Spot Price
Of Crude Oil *







*PAST
PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS





As seen
in the chart above, 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 near month only approach had
higher returns, and periods where the 12 month approach had higher total
returns. The above chart does not represent the performance history of USOF or
any affiliated funds.





Historically,
the crude oil futures markets have experienced periods of contango and
backwardation, with backwardation being in place more often than contango.
During 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. The crude oil markets remained in backwardation
until late in the second quarter of 2008 when they moved into contango. The
crude oil markets remained in contango until late in the third quarter of 2008,
when the markets moved into backwardation. Early in the fourth quarter
of 2008, the crude oil market moved back into contango and remained in
contango for the balance of 2008. During the first quarter of 2009, the crude
oil market remained in contango.  During parts of January and February
of 2009, the level of contango was unusually steep.





Periods
of contango or backwardation do not materially 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.





Crude Oil Market. During the
three month period ended March 31, 2009, crude oil prices were impacted by
several factors. On the consumption side, demand remained weak inside and
outside the United States as global economic growth, including emerging
economies such as China and India, remained weak to negative for the first
quarter of the year. On the supply side, efforts to reduce production by the
Organization of the Petroleum Exporting Countries to more closely match global
consumption were only partially successful. This divergence between production
and comsumption has led to large build-ups in crude oil inventories and
contributed to weak oil prices. However, crude oil prices did finish the first
quarter of 2009 approximately 11% higher than at the beginning of the
quarter.




24





Crude Oil Price Movements in
Comparison to other Energy Commodities and Investment Categories. The
General Partner believes that investors frequently measure the degree to which
prices or total returns of one investment or asset class move up or down in
value in concert with another investment or asset class. Statistically, such a
measure is usually done by measuring the correlation of the price movements of
the two different investments or asset classes over some period of time. The
correlation is scaled between 1 and -1, where 1 indicates that the two
investment options move up or down in price or value together, known as
“positive correlation,” and -1 indicating that they move in completely opposite
directions, known as “negative correlation.” A correlation of 0 would mean that
the movements of the two are neither positively or negatively correlated, known
as “non-correlation.” That is, the investment options sometimes move up and down
together and other times move in opposite directions.




For the
ten year time period between 1998 and 2008, the chart below compares the monthly
movements of crude oil versus the monthly movements of several other energy
commodities, such as natural gas, heating oil, and unleaded gasoline, as
well as several major non-commodity investment asset classes, such as large cap
U.S. equities, U.S. government bonds and global equities. It can be seen that
over this particular time period, the movement of crude oil on a monthly basis
was NOT strongly correlated, positively or negatively, with the movements of
large cap U.S. equities, U.S. government bonds or global equities. However,
movements in crude oil had a strong positive correlation to movements in heating
oil and unleaded gasoline. Finally, crude oil had a positive, but weaker,
correlation with natural gas.





10
      Year Correlation Matrix 1998-2008
            
            Large
      Cap U.S. Equities (S&P 500)
            
            
            U.S.
      Govt. Bonds (EFFAS U.S. Government Bond Index)
            
            
            Global
      Equities (FTSE World Index)
            
            
            Unleaded
      Gasoline
            
            
            Natural
      Gas
            
            
            Heating
      Oil
            
            
            Crude
      OilLarge
      Cap U.S. Equities (S&P 500)
            
            
            1.000
            
            
            
            -0.223
            
            
            
            0.936
            
            
            
            0.266
            
            
            
            0.045
            
            
            
            0.003
            
            
            
            0.063U.S.
      Govt. Bonds (EFFAS U.S. Government Bond Index)
            
            
            
            
            
            
            1.000
            
            
            
            -0.214
            
            
            
            -0.134
            
            
            
            0.054
            
            
            
            0.037
            
            
            
            -0.29Global
      Equities (FTSE World Index)
            
            
            
            
            
            
            
            
            
            
            1.000
            
            
            
            0.384
            
            
            
            0.072
            
            
            
            0.084
            
            
            
            0.155Unleaded
      Gasoline
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            1.000
            
            
            
            0.254
            
            
            
            0.787
            
            
            
            0.747Natural
      Gas
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            1.000
            
            
            
            0.394
            
            
            
            0.292Heating
      Oil
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            1.000
            
            
            
            0.738Crude
      Oil
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            1.000source:
      Bloomberg, NYMEX




PAST PERFORMANCE IS NOT NECESSARILY
INDICATIVE OF FUTURE RESULTS




25









The chart
below covers a more recent, but much shorter, range of dates than the above
chart. Over the one year period ended March 31, 2009, crude oil continued to
have a strong positive correlation with heating oil and unleaded gasoline.
During this period, it also had a stronger correlation with the movements of
natural gas than it had displayed over the ten year period ended December 31,
2008. Notably, the correlation between crude oil and both large cap U.S.
equities and global equities, which had been essentially non-correlated over the
ten year period ended December 31, 2008, displayed results that indicated that
they had a mildly positive correlation over this shorter time period,
particularly due to the recent downturn in the U.S. economy. Finally, the
results showed that crude oil and U.S. government bonds, which had essentially
been non-correlated for the ten year period ended December 31, 2008, were weakly
negatively correlated over this more recent time period.





Correlation
      Matrix –
              12
      months ended March 31, 2009
            
            Large
      Cap U.S. Equities (S&P 500)
            
            
            U.S.
      Govt. Bonds (EFFAS U.S. Government Bond Index)
            
            
            Global
      Equities (FTSE World Index)
            
            
            Unleaded
      Gasoline
            
            
            Natural
      Gas
            
            
            Heating
      Oil
            
            
            Crude
      OilLarge
      Cap U.S. Equities (S&P 500)
            
            
            1.000
            
            
            
            0.234
            
            
            
            0.980
            
            
            
            0.504
            
            
            
            0.564
            
            
            
            0.014
            
            
            
            0.527U.S.
      Govt. Bonds (EFFAS U.S. Government Bond Index)
            
            
            
            
            
            
            1.000
            
            
            
            0.296
            
            
            
            -0.399
            
            
            
            -0.296
            
            
            
            0.067
            
            
            
            -0.220Global
      Equities (FTSE World Index)
            
            
            
            
            
            
            
            
            
            
            1.000
            
            
            
            0.525
            
            
            
            0.562
            
            
            
            0.067
            
            
            
            0.541Unleaded
      Gasoline
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            1.000
            
            
            
            0.883
            
            
            
            0.189
            
            
            
            0.811Natural
      Gas
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            1.000
            
            
            
            0.444
            
            
            
            0.871Heating
      Oil
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            1.000
            
            
            
            0.513Crude
      Oil
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            1.000Source:
      Bloomberg, NYMEX





PAST
PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS





Investors
are cautioned that the historical price relationships between crude oil and
various other energy commodities, as well as other investment asset classes, as
measured by correlation may not be reliable predictors of future price movements
and correlation results. The results pictured above would have been different if
a different range of dates had been selected. The General Partner believes that
crude oil has historically not demonstrated a strong correlation with equities
or bonds over long periods of time. However, the General Partner also believes
that in the future it is possible that crude oil could have long term
correlation results that indicate prices of crude oil more closely track the
movements of equities or bonds. In addition, the General Partner believes that,
when measured over time periods shorter than ten years, there will always be
some periods where the correlation of crude oil to equities and bonds will be
either more strongly positively correlated or more strongly negatively
correlated than the long term historical results suggest.




The correlations between
crude oil, natural gas, heating oil and gasoline are relevant because the
General Partner endeavors to invest USOF’s assets in Oil Futures Contracts and
Other Crude Oil-Related Investments so that daily changes in USOF’s NAV
correlate as closely as possible with daily changes in the price of the
Benchmark Oil Futures Contract. If certain other fuel-based commodity futures
contracts do not closely correlate with the Oil Futures Contract, then
their use could lead to greater tracking error. As noted, the General Partner
also believes that the changes in the price of the Benchmark Oil Futures
Contract will closely correlate with changes in the spot price of light, sweet
crude oil.





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.




26





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. The values which are used by USOF for its forward
contracts are provided by its commodity broker who uses market prices when
available, while over-the-counter contracts are valued 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 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 baskets consisting of
100,000 units (“Creation Baskets”) and (ii) interest earned on Treasuries,
cash and/or cash equivalents. USOF has allocated substantially all of its net
assets to trading in Oil Interests. 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. A significant portion of the NAV
is held in cash and cash equivalents that are used as margin and as
collateral for USOF’s trading in Oil Interests. The balance of the net assets is
held in USOF’s account at its custodian bank. Interest earned on USOF’s
interest-bearing funds is paid to USOF. In prior periods, the amount of cash
earned by USOF from the sale of Creation Baskets and from interest has exceeded
the amount of cash required to pay USOF’s expenses. However, there can be no
assurance that the amount of cash earned will do so in a period of very low
short-term interest rates. In that event, USOF may not be able to rely on its
income to cover cash expenses, which could cause a drop in USOF’s NAV over
time.





USOF’s
investment in Oil Interests may be subject to periods of illiquidity because of
market conditions, regulatory considerations and other reasons. For example,
most 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 nor
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 the three month
period ended March 31, 2009, 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.





Since
March 23, 2007, USOF has been responsible for expenses relating to (i)
investment management fees, (ii) brokerage fees and commissions, (iii)
licensing fees for the use of intellectual property, (iv) ongoing registration
expenses in connection with offers and sales of its units subsequent to the
initial offering, (v) taxes and other expenses, including certain tax reporting
costs, (vi) fees and expenses of the independent directors of the General
Partner and (vii) other extraordinary expenses not in the ordinary course of
business, while the General Partner has been responsible for expenses
relating to the fees of USOF’s marketing agent, administrator and custodian.
If the General Partner and USOF are unsuccessful in raising sufficient
funds to cover these respective 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 aggregate market value 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 aggregate market value of the contracts 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.




27





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 had in utilizing its model to trade in Oil Interests in a manner
intended to track the changes in the spot price of crude oil as represented by
the change in the near month crude oil futures contract, as well as drastic
market occurrences, could ultimately lead to the loss of all or substantially
all of an investor’s capital.





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 futures 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 generally posts
margin and/or holds liquid assets that are approximately equal to the market
value 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. These futures commission merchants are 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 three month period ended March 31,
2009, 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.





In the
future, USOF may purchase over-the-counter contracts. See “Item 3. Quantitative
and Qualitative Disclosures About Market Risk” of this quarterly report on Form
10-Q for a discussion of over-the-counter contracts.





As of March 31, 2009, USOF had deposits
in domestic and foreign financial institutions, including cash investments in
money market funds, in the amount of $2,780,809,660. This amount is subject to
loss should these institutions cease operations.





Off
Balance Sheet Financing





As of
March 31, 2009, 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.




28




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 0.45% of NAV on its average net
assets.





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 CPO and the
registration and listing of USOF and its units with the SEC, FINRA and the
AMEX, respectively. However, following USOF’s initial offering of units,
offering costs incurred in connection with registering and listing additional
units of USOF are directly borne on an ongoing basis by USOF, and not by the
General Partner.




The
General Partner pays the fees of USOF’s marketing agent, ALPS Distributors,
Inc., and the fees of the custodian and transfer agent, Brown Brothers Harriman
& Co. (“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
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. USOF also pays the fees and expenses
associated with its tax accounting and reporting requirements with the exception
of certain initial implementation service fees and base service fees which
are paid by the General Partner.





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, and,
subsequent to the initial offering, registration and other fees paid to the SEC,
FINRA, or other regulatory agencies 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 (Unaudited).




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 with 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.





Item 3.  Quantitative and Qualitative Disclosures
About Market Risk.




Over-the-Counter
Derivatives




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 an over-the-counter contract bears the credit risk
that the other party may not be able to perform its obligations under its
contract.




29





Some
crude oil-based derivatives transactions contain fairly generic terms and
conditions and are available from a wide range of participants. Other crude
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 crude 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 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 the 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 such 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 clearinghouse 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 clearinghouse would
now be USOF’s counterparty. USOF would still retain any price risk associated
with its transaction.




The
creditworthiness of each potential counterparty is assessed by the General
Partner. The General Partner assesses or reviews, as appropriate, the
creditworthiness of each potential or existing counterparty to an
over-the-counter contract pursuant to guidelines approved by the General
Partner's board of directors (the “Board”). Furthermore, the
General Partner on behalf of USOF only enters into over-the-counter
contracts with counterparties who are, or are affiliates of, (a) banks
regulated by a United States federal bank regulator, (b) broker-dealers
regulated by the SEC, (c) insurance companies domiciled in the United
States, and (d) producers, users or traders of energy, whether or not
regulated by the CFTC. Any entity acting as a counterparty shall be
regulated in either the United States or the United Kingdom unless
otherwise approved by the Board after consultation with its legal counsel.
Existing counterparties are also reviewed periodically by the General
Partner.





USOF
anticipates that the use of Other Oil Interests together with its investments in
Oil Futures Contracts will produce price and total return results that closely
track the investment goals of USOF.





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 if the General Partner felt 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 three month period ended March 31, 2009, USOF did not employ any hedging
methods such as those described above since all of its investments were made
over an exchange. Therefore, USOF was not exposed to counterparty
risk.




30




Item 4.  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 Securities Exchange Act of 1934, as amended, 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 quarterly report on Form 10-Q.





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.




31




Part
II.  OTHER INFORMATION




Item
1.  Legal Proceedings.





Not applicable.





Item
1A.  Risk Factors.





There has not been a material change
from the risk factors previously disclosed in USOF's Annual Report on Form 10-K
for the fiscal year ended December 31, 2008.





Item
2.  Unregistered Sales of Equity Securities and Use of
Proceeds.





Not
applicable.





Item
3.  Defaults Upon Senior Securities.





Not
applicable.





Item
4.  Submission of Matters to a Vote of Security
Holders.





Not applicable.





Item 5.  Other
Information.





Monthly
Account Statements





Pursuant
to the requirement under Rule 4.22 under the Commodity Exchange Act, 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 furnished to 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.





Item 6.  Exhibits.




Listed
below are the exhibits which are filed as part of this quarterly report on Form
10-Q (according to the number assigned to them in Item 601 of Regulation
S-K):





Exhibit
                Number
              Description of
      Document31.1*
              Certification
      by Principal Executive Officer Pursuant to Section 302 of the
      Sarbanes-Oxley Act of 2002.


31.2*
            Certification
      by Principal Financial Officer Pursuant to Section 302 of the
      Sarbanes-Oxley Act of 2002.


32.1*
            Certification
      by Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as
      Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of
      2002.


32.2*
            Certification
      by Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as
      Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of
      2002.





*  
Filed herewith




32




SIGNATURES




Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.





United
States Oil Fund, LP (Registrant)


By:  United
States Commodity Funds LLC, its general partner





By:
                  /s/
      Nicholas D. GerberNicholas
      D. GerberChief
      Executive Officer
                    
                    Date:  May 11, 2009




By:
                    /s/
      Howard MahHoward
      MahChief
      Financial Officer
                      
                      Date:  May 11,
    2009







33