Summary of UNITED STATES 12 MONTH OIL FUND, LP

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 12 Month Oil Fund, LP ("US12OF") 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 US12OF'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 US12OF'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 US12OF cannot assure investors that the projections included in these forward-looking statements will come to pass. US12OF's actual results could differ materially from those expressed or implied by the forward-looking statements as a result of various factors.

US12OF 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 US12OF assumes no obligation to update any such forward-looking statements. Although US12OF 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 US12OF may make directly to them or through reports that US12OF 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

US12OF, 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 US12OF 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 average of the prices of 12 Oil Futures Contracts on light, sweet crude oil as traded on the New York Mercantile Exchange (the "Benchmark Futures Contracts") consisting of the near month contract to expire and the contracts for the following 11 months for a total of 12 consecutive months' contracts, except when the near month contract is within two weeks of expiration, in which case it will be measured by the futures contract that is the next month contract to expire and the contracts for the following 11 consecutive months, less US12OF's expenses.

US12OF 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 Benchmark Futures Contracts, also measured in percentage terms. US12OF's general partner believes the Benchmark Futures Contracts historically have exhibited a close correlation with the spot price of light, sweet crude oil. It is not the intent of US12OF 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.

On any valuation day, the Benchmark Futures Contracts are the near month futures contract for light, sweet crude oil traded on the New York Mercantile Exchange (the "NYMEX") and the contracts for the following 11 months for a total of 12 consecutive months' contracts unless the near month contract will expire within two weeks of the valuation day, in which case the Benchmark Futures Contracts are the next month contract for light, sweet crude oil traded on the NYMEX and the contracts for the following 11 consecutive months. "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.

US12OF invests in futures contracts for light, sweet crude oil, 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 "Crude Oil Interests" in this quarterly report on Form 10-Q.

The regulation of Crude Oil Interests in the United States is a rapidly changing area of law and is subject to ongoing modification by governmental and judicial action. As stated in the section "What are the Risk Factors Involved with an Investment in US12OF?" of US12OF's registration statement as filed with the SEC, regulation of the commodity interests and energy markets is extensive and constantly changing; future regulatory developments in the commodity interests and energy markets are impossible to predict but may significantly and adversely affect US12OF.

Currently, a number of proposals to alter the regulation of Crude Oil Interests are being considered by federal regulators and legislators. These proposals include the imposition of hard position limits on energy-based commodity futures contracts, the extension of position and accountability limits to futures contracts on non-U.S. exchanges previously exempt from such limits, and the forced use of clearinghouse mechanisms for all over-the-counter transactions. An additional proposal would aggregate and limit all positions in energy futures held by a single entity, whether such positions exist on U.S. futures exchanges, non-U.S. futures exchanges, or in over-the-counter contracts. If any of the aforementioned proposals are implemented, US12OF's ability to meet its investment objective may be negatively impacted.

The general partner of US12OF, 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 Amended and Restated Agreement of Limited Partnership of US12OF (the "LP Agreement") to manage US12OF. The General Partner is authorized by US12OF in its sole judgment to employ and establish the terms of employment for, and termination of, commodity trading advisors or futures commission merchants.

Average crude oil futures prices were volatile during the six months ended June 30, 2009 and exhibited wide daily swings along with an uneven upward trend from late February to late March 2009. The average price of the Benchmark Futures Contracts started the period at $54.01 per barrel. The low of the period was on February 18, 2009 when prices reached $44.24 per barrel. Average prices rose sharply over the course of the period and hit a peak on June 11, 2009 of $76.50 per barrel. The period ended with the average price of the Benchmark Futures Contracts at $73.02 per barrel, up approximately 35.20% over the period. Similarly, US12OF's NAV rose during the period from a starting level of $31.24 per unit to a high on June 11, 2009 of $39.57 per unit. US12OF's NAV reached its low for the period on February 18, 2009 at $24.34 per unit. The NAV on June 30, 2009 was $37.75, up approximately 20.84% over the period.

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 two quarters 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. Crude oil inventories, which reached historic levels in January and February and which appear to be the primary cause of the steep level of contango, began to drop in March and for the balance of the first half of 2009. 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 Futures Contracts and the Computation of the NAV

The NAV of US12OF units is calculated once each NYSE Arca trading day. The NAV for a particular trading day is released after 4:00 p.m. New York time. Trading during the core trading session on the NYSE Arca typically closes at 4:00 p.m. New York time. US12OF's administrator 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 US12OF investments, including ICE Futures contracts or other futures contracts, as of the earlier of the close of the New York Stock Exchange or 4:00 p.m. New York time.

Results of Operations and the Crude Oil Market

Results of Operations. On December 6, 2007, US12OF listed its units on the American Stock Exchange (the "AMEX") under the ticker symbol "USL." On that day, US12OF established its initial offering price at $50.00 per unit and issued 300,000 units to the initial authorized purchaser, Merrill Lynch Professional Clearing Corp., in exchange for $15,001,000 in cash. As a result of the acquisition of the AMEX by NYSE Euronext, US12OF's units no longer trade on the AMEX and commenced trading on the NYSE Arca on November 25, 2008.

Since its initial offering of 11,000,000 units, US12OF has made one subsequent offering of its units: 100,000,000 units which were registered with the SEC on March 31, 2009. As of June 30, 2009, US12OF had issued 6,600,000 units, 4,800,000 of which were outstanding. As of June 30, 2009, there were 104,400,000 units registered but not yet issued.

More units may have been issued by US12OF 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 US12OF cannot be resold by US12OF. As a result, US12OF 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 Six Months Ended June 30, 2009 Compared to the Six Months Ended June 30, 2008

As of June 30, 2009, the total unrealized gain on Futures Contracts owned or held on that day was $42,823,360 and US12OF established cash deposits, including cash investments in money market funds, that were equal to $138,381,031. US12OF held 104.74% of its cash assets in overnight deposits at its custodian bank, while -4.74% of the cash balance was held with the futures commission merchant as margin deposits for the Futures Contracts purchased. Margin requirements at this time were satisfied by unrealized appreciation on investments held at the futures commission merchant, including a forward funding excess of $17,001,780 in open equity over the required margin deposit amount. The ending per unit NAV on June 30, 2009 was $37.75.

By comparison, as of June 30, 2008, the total unrealized gain on Futures Contracts owned or held on that day was $2,630,810 and US12OF established cash deposits, including cash investments in money market funds, that were equal to $5,770,611. US12OF held 101.69% of its cash assets in overnight deposits at its custodian bank, while -1.69% of the cash balance was held with the futures commission merchant as margin deposits for the Futures Contracts purchased. Margin requirements at this time were satisfied by unrealized appreciation on investments held at the futures commission merchant, including a forward funding excess of $1,848,298 in open equity over the required margin deposit amount. The ending per unit NAV on June 30, 2008 was $84.05. The change in the per unit NAV for June 30, 2009 compared to June 30, 2008 was primarily a result of sharply lower prices for crude oil and the related decline in the value of the Oil Futures Contracts that US12OF had invested in between the period ended June 30, 2008 and the period ended June 30, 2009.

Portfolio Expenses. US12OF's expenses consist of investment management fees, brokerage fees and commissions, certain offering costs, licensing fees and the fees and expenses of the independent directors of the General Partner. The management fee that US12OF pays to the General Partner is calculated as a percentage of the total net assets of US12OF. US12OF pays the General Partner a management fee of 0.60% of net assets. The fee is accrued daily.

During the six month period ended June 30, 2009, the daily average total net assets of US12OF were $122,252,443. During the six month period ended June 30, 2009, the management fee paid by US12OF amounted to $363,743, and was accrued daily. By comparison, during the six month period ended June 30, 2008, the daily average total net assets of US12OF were $10,713,219. During the six month period ended June 30, 2008, the management fee paid by US12OF amounted to $31,964, and was accrued daily.

In addition to the management fee, US12OF pays 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 six months ended June 30, 2009 was $229,416, as compared to $102,096 for the six months ended June 30, 2008. The increase in expenses in the six months ended June 30, 2009 as compared to the six months ended June 30, 2008 was primarily due to the relative size of US12OF 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 unitholders during the period. For the six months ended June 30, 2009, US12OF incurred $66,500 in fees and other expenses relating to the registration and offering of additional units. By comparison, for the six months ended June 30, 2008, US12OF did not incur any fees or other expenses relating to the registration and offering of additional units. Expenses incurred in connection with organizing US12OF and the costs of the initial offering of units were borne by the General Partner, and are not subject to reimbursement by US12OF.

US12OF is responsible for paying 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 the General Partner's audit committee members. US12OF shares these fees with the United States Oil Fund, LP ("USOF"), the United States Natural Gas Fund, LP ("USNG"), 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 US12OF's portion of such fees was $1,762. 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 of the General Partner. 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.

US12OF 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 six month period ended June 30, 2009, total commissions paid to brokers amounted to $39,009. By comparison, during the six month period ended June 30, 2008, total commissions paid to brokers amounted to $1,502. The increase in the total commissions paid to brokers was primarily a function of the increase in US12OF's average total net assets and the increase in redemptions and creations of units during the period. The increase in assets required US12OF to purchase a greater number of futures contracts and incur a larger amount of commissions. As an annualized percentage of total net assets, the figure for the six months ended June 30, 2009 represents approximately 0.06% of total net assets. By comparison, the figure for the six months ended June 30, 2008 represented approximately 0.03% 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. US12OF 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 its portfolio. Typically, such investments do not require US12OF to pay the full amount of the contract value at the time of purchase, but rather require US12OF to post an amount as a margin deposit against the eventual settlement of the contract. As a result, US12OF retains an amount that is approximately equal to its total net assets, which US12OF 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 US12OF's custodian bank. The Treasuries, cash and/or cash equivalents earn interest that accrues on a daily basis. For the six month period ended June 30, 2009, US12OF earned $123,589 in interest income on such cash holdings. Based on US12OF's average daily total net assets, this is equivalent to an annualized yield of 0.20%. US12OF did not purchase Treasuries during the six month period ended June 30, 2009 and held all of its funds in cash and/or cash equivalents during this time period. By comparison, for the six month period ended June 30, 2008, US12OF earned $113,197 in interest income on such cash holdings. Based on US12OF's average daily total net assets, this was equivalent to an annualized yield of 2.12%. US12OF did not purchase Treasuries during the six month period ended June 30, 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 six month period ended June 30, 2009 compared to the same time period in 2008. As a result, the amount of interest earned by US12OF as a percentage of total net assets was lower during the six month period ended June 30, 2009.

For the Three Months Ended June 30, 2009 Compared to the Three Months Ended June 30, 2008

During the three month period ended June 30, 2009, the daily average total net assets of US12OF were $178,141,463. During the three month period ended June 30, 2009, the management fee paid by US12OF amounted to $266,480, and was accrued daily. By comparison, during the three month period ended June 30, 2008, the daily average total net assets of US12OF were $7,452,830. During the three month period ended June 30, 2008, the management fee paid by US12OF amounted to $11,118, and was accrued daily.

In addition to the management fee, US12OF pays 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, 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 June 30, 2009 was $149,313, as compared to $86,969 for the three months ended June 30, 2008. The increase in expenses from the three months ended June 30, 2008 to the three months ended June 30, 2009 was primarily due to the relative size of US12OF 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 unitholders during the period. For the three months ended June 30, 2009, US12OF incurred $45,500 in fees and other expenses relating to the registration and offering of additional units. By comparison, for the three months ended June 30, 2008, US12OF did not incur any fees and other expenses relating to the registration and offering of additional units. Expenses incurred in connection with organizing US12OF and the costs of the initial offering of units were borne by the General Partner, and are not subject to reimbursement by US12OF.

US12OF is responsible for paying 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 the General Partner's audit committee members. US12OF shares these fees with USOF, USNG, UGA and USHO based on the relative assets of each fund computed on a daily basis. These fees for the three months ended June 30, 2009 amounted to a total of $79,781 for all funds, and US12OF's portion of such fees was $2,873. By comparison, for the three months ended June 30, 2008, these fees amounted to a total of $68,374 for all funds, and US12OF's portion of such fees was $353. Directors' expenses increased for the three months ended June 30, 2009 as compared to the three months ended June 30, 2008 due to payment for directors' and officers' liability insurance and an increase in the compensation awarded to the independent directors of the General Partner. 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.

US12OF also incurs commissions to brokers for the purchase and sale of Oil Futures Contracts, Other Oil Interests or Treasuries. During the three month period ended June 30, 2009, total commissions paid to brokers amounted to $10,242. By comparison, during the three month period ended June 30, 2008, total commissions paid to brokers amounted to $0. The increase in the total commissions paid to brokers was primarily a function of the increase in US12OF's average total net assets and the increase in redemptions and creations of units during the period. The increase in assets required US12OF to purchase a greater number of futures contracts and incur a larger amount of commissions. As an annualized percentage of total net assets, the figure for the three months ended June 30, 2009 represents approximately 0.02% of total net assets. By comparison, the figure for the three months ended June 30, 2008 represented approximately 0.00% 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. US12OF 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 its portfolio. Typically, such investments do not require US12OF to pay the full amount of the contract value at the time of purchase, but rather require US12OF to post an amount as a margin deposit against the eventual settlement of the contract. As a result, US12OF retains an amount that is approximately equal to its total net assets, which US12OF 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 US12OF's custodian bank. The Treasuries, cash and/or cash equivalents earn interest that accrues on a daily basis. For the three month period ended June 30, 2009, US12OF earned $78,968 in interest income on such cash holdings. Based on US12OF's average daily total net assets, this is equivalent to an annualized yield of 0.18%. US12OF did not purchase Treasuries during the three month period ended June 30, 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 June 30, 2008, US12OF earned $26,130 in interest income on such cash holdings. Based on US12OF's average daily total net assets, this was equivalent to an annualized yield of 1.41%. US12OF did not purchase Treasuries during the three month period ended June 30, 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 June 30, 2009 compared to the same time period in 2008. As a result, the amount of interest earned by US12OF as a percentage of total net assets was lower during the three month period ended June 30, 2009.

Tracking US12OF's Benchmark

US12OF seeks to manage its portfolio such that changes in its average daily NAV, on a percentage basis, closely track changes in the average of the daily prices of the Benchmark Futures Contracts, also on a percentage basis. Specifically, US12OF 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 Futures Contracts. As an example, if the average daily movement of the average of the prices of the Benchmark Futures Contracts for a particular . . .