Gasoline futures are currently in a backwardated market, according to CME Group data, where later dated contracts cost less than front-month contracts set to expire.
ETFs, like UGA, that track front month contracts benefit from backwardation as they roll front month contracts to avoid physical delivery of the commodity. When the contract is about to expire, UGA sells the futures contract and buys a cheaper later-dated contract in a backwardated market at a profit. [How Contango Can Affect Your Commodity ETF]
United States Gasoline Fund
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Max Chen contributed to this article.