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

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

USHO, 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 USHO 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 heating oil, as measured by the changes in the price of the futures contract on heating oil for delivery to the New York harbor as traded on the New York Mercantile Exchange (the "Benchmark Futures Contract") that is the near month contract to expire, except when the near month contract is within two weeks of expiration, the futures contract will be the next month contract to expire, less USHO's expenses.

USHO seeks to achieve its investment objective by investing in a combination of heating oil futures contracts and other heating oil-related investments such that changes in its NAV, measured in percentage terms, will closely track the Benchmark Futures Contract, also measured in percentage terms. USHO's general partner believes the Benchmark Futures Contract historically has exhibited a close correlation with the spot price of heating oil. It is not the intent of USHO to be operated in a fashion such that the NAV will equal, in dollar terms, the spot price of heating oil or any particular futures contract based on heating oil. Management believes that it is not practical to manage the portfolio to achieve such an investment goal when investing in listed heating oil futures contracts and other heating oil-related investments.

On any valuation day, the Benchmark Futures Contract is the near month futures contract for heating oil traded on the New York Mercantile Exchange (the "NYMEX") unless the near month contract will expire within two weeks of the valuation day, in which case the Benchmark Futures Contract is the next month contract for heating 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.

USHO invests in futures contracts for heating oil, crude 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, "Futures Contracts") and other heating oil-related investments such as cash-settled options on Futures Contracts, forward contracts for heating oil and over-the-counter transactions that are based on the price of heating oil, crude oil and other petroleum-based fuels, Futures Contracts and indices based on the foregoing (collectively, "Other Heating Oil-Related Investments"). For convenience and unless otherwise specified, Futures Contracts and Other Heating Oil-Related Investments collectively are referred to as "Heating Oil Interests" in this quarterly report on Form 10-Q.

The regulation of Heating 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 USHO?" of USHO'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 USHO.

Currently, a number of proposals to alter the regulation of Heating 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, USHO's ability to meet its investment objective may be negatively impacted.

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

Heating oil futures prices were volatile during the six months ended June 30, 2009. The price of the Benchmark Futures Contract started the period at the $1.4421 per gallon level. It rose sharply over the course of the period and hit a peak on June 17, 2009 of approximately $1.897 per gallon. The low of the period was on March 11, 2009 when prices dropped to the $1.133 per gallon level. The period ended with the Benchmark Futures Contract at $1.788 per gallon, up approximately 23.97% over the period. Similarly, USHO's NAV rose during the period from a starting level of $21.94 per unit to a high on June 17, 2009 of $27.27 per unit. USHO's NAV reached its low for the period on March 11, 2009 at $17.40 per unit. The NAV on June 30, 2009 was $25.71, up approximately 17.18% over the period. The return of approximately 23.97% on the Benchmark Futures Contract listed above is a hypothetical return only and could not actually be achieved by an investor holding futures contracts. An investment in heating oil futures contracts would need to be rolled forward during the time period described in order to achieve such a result.

At the beginning of the first quarter of 2009, the heating oil futures market was in a state of contango, meaning that the price of the near month heating oil futures contract was typically lower than the price of the next month heating oil futures contract, or contracts further away from expiration. For the first half of 2009, the heating oil futures market remained in contango, except for 1 day, when the heating oil futures market moved into a mild backwardation market then returned to a contango market. A backwardation market is one in which the price of the near month heating oil futures contract is higher than the price of the next month heating oil futures contract, or contracts further away from expiration. At the end of the first quarter of 2009, the market moved into a much steeper contango market and remained in a steeper contango market 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 Heating Oil Futures Prices and the Impact on Total Returns."

Valuation of Futures Contracts and the Computation of the NAV

The NAV of USHO 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. USHO'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 USHO 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 Heating Oil Market

Results of Operations. On April 9, 2008, USHO listed its units on the American Stock Exchange (the "AMEX") under the ticker symbol "UHN." On that day, USHO established its initial offering price at $50.00 per unit and issued 200,000 units to the initial authorized purchaser Merrill Lynch, in exchange for $10,001,000 in cash. As a result of the acquisition of the AMEX by NYSE Euronext, USHO's units no longer trade on the AMEX and commenced trading on the NYSE Arca on November 25, 2008.

Since its initial offering of 10,000,000 units, USHO has not made any subsequent offerings of its units. As of June 30, 2009, USHO had issued 500,000 units, 300,000 of which were outstanding. As of June 30, 2009, there were 9,500,000 units registered but not yet issued.

More units may have been issued by USHO 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 USHO cannot be resold by USHO. As a result, USHO 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 Period from April 9, 2008 (Commencement of Operations) to June 30, 2008

Since USHO was conducting operations for only a portion of the six month period ended June 30, 2008, the comparison of the results of operations for the six months ended June 30, 2009 and the period from April 9, 2008 to June 30, 2008 may not be meaningful.

As of June 30, 2009, the total unrealized loss on heating oil Futures Contracts owned or held on that day was $309,725 and USHO established cash deposits, including cash investments in money market funds that were equal to $8,030,859. USHO held 70.25% of its cash assets in overnight deposits at its custodian bank, while 29.75% of the cash balance was held with the futures commission merchant as margin deposits for the Futures Contracts purchased. The ending per unit NAV on June 30, 2009 was $25.71.

By comparison, as of June 30, 2008, the total unrealized gain on heating oil Futures Contracts owned or held on that day was $256,473 and USHO established cash deposits, including cash investments in money market funds that were equal to $18,675,889. USHO held 76.73% of its cash assets in overnight deposits at its custodian bank, while 23.27% of the cash balance was held with the futures commission merchant as margin deposits for the Futures Contracts purchased. The ending per unit NAV on June 30, 2008 was $63.13. 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 heating oil and the related decline in the value of the Futures Contracts that USHO had invested in between the period ended June 30, 2008 and the period ended June 30, 2009.

Portfolio Expenses. USHO'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 USHO pays to the General Partner is calculated as a percentage of the total net assets of USHO. USHO pays the General Partner a management fee of 0.60% of its average net assets. The fee is accrued daily.

During the six month period ended June 30, 2009, the daily average total net assets of USHO were $5,562,576. During the six month period ended June 30, 2009, the management fee paid by USHO amounted to $16,551, which was calculated at 0.60% of its average net assests and was accrued daily. By comparison, during the period from April 9, 2008 to June 30, 2008, the daily average total net assets of USHO were $16,684,669. The management fee paid by USHO during the period amounted to $22,702, which was calculated at 0.60% of its average net assets and was accrued daily.

In addition to the management fee, USHO 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 $54,453, as compared to $103,302 for the period from April 9, 2008 to June 30, 2008. The decrease in expenses for the six months ended June 30, 2009 as compared to the period from April 9, 2008 to June 30, 2008 was primarily due to the relative size of USHO and activity that resulted from its decreased size, including decreased licensing fees and decreased tax reporting costs due to the fewer number of unitholders during the period. USHO did not incur any fees or other expenses relating to the registration and offering of additional units for the six month period ended June 30, 2008 or for the period from April 9, 2008 to June 30, 2008. Expenses incurred in connection with organizing USHO and the costs of the initial offering of units were borne by the General Partner, and are not subject to reimbursement by USHO.

USHO 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. USHO shares these fees with the United States Oil Fund, LP ("USOF"), the United States Natural Gas Fund, LP ("USNG"), the United States 12 Month Oil Fund, LP ("US12OF") and the United States Gasoline Fund, LP ("UGA") 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 USHO's portion of such fees was $1,422. 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.

USHO also incurs commissions to brokers for the purchase and sale of Futures Contracts, Other Heating Oil-Related Investments 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 $3,770. By comparison, during the period from April 9, 2008 to June 30, 2008, total commissions paid to brokers amounted to $3,491. The increase in the total commissions paid to brokers was primarily a function of the longer reporting period versus the comparison period. As an annualized percentage of average net assets, the figure for the six month period ended June 30, 2009 represents approximately 0.14% of average net assets. By comparison, the figure for the period from April 9, 2008 to June 30, 2008 represented approximately 0.09% 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. USHO seeks to invest its assets such that it holds Futures Contracts and Other Heating Oil-Related Investments in an amount equal to the total net assets of its portfolio. Typically, such investments do not require USHO to pay the full amount of the contract value at the time of purchase, but rather require USHO to post an amount as a margin deposit against the eventual settlement of the contract. As a result, USHO retains an amount that is approximately equal to its total net assets, which USHO 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 USHO'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, USHO earned $6,839 in interest income on such cash holdings. Based on USHO's average daily total net assets, this is equivalent to an annualized yield of 0.25%. USHO 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 period from April 9, 2008 to June 30, 2008, USHO earned $66,323 in interest income on such cash holdings. Based on USHO's average daily total net assets, this was equivalent to an annualized yield of 1.75%. USHO did not purchase Treasuries during the period from April 9, 2008 to 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 period from April 9, 2008 to June 30, 2008. As a result, the amount of interest earned by USHO 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 Period from April 9, 2008 (Commencement of Operations) to June 30, 2008

Since USHO was conducting operations for only a portion of the three month period ended June 30, 2008, the comparison of the results of operations for the three months ended June 30, 2009 and the period from April 9, 2008 to June 30, 2008 may not be meaningful.

During the three month period ended June 30, 2009, the daily average total net assets of USHO were $6,953,804. During the three month period ended June 30, 2009, the management fee paid by USHO amounted to $10,403, which was calculated at 0.60% of its average net assets and was accrued daily. By comparison, during the period from April 9, 2008 to June 30, 2008, the daily average total net assets of USHO were $16,684,669. The management fee paid by USHO during the period amounted to $22,702, which was calculated at 0.60% of its average net assets and was accrued daily.

In addition to the management fee, USHO 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 $27,623, as compared to $103,302 for the period from April 9, 2008 to June 30, 2008. The decrease in expenses for the three months ended June 30, 2009 as compared to the period from April 9, 2008 to June 30, 2008 was primarily due to the relative size of USHO and activity that resulted from its decreased size, including decreased licensing fees and decreased tax reporting costs due to the fewer number of unitholders during the period. For the three month period ended June 30, 2009 and for the period from April 9, 2008 to June 30, 2008, USHO did not incur any fees and other expenses relating to the registration and offering of additional units. Expenses incurred in connection with organizing USHO and the costs of the initial offering of units were borne by the General Partner, and are not subject to reimbursement by USHO.

USHO 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. USHO shares these fees with USOF, USNG, US12OF and UGA based on the relative assets of each fund computed on a daily basis. The fees for the three months ended June 30, 2009 amounted to a total of $79,781 for all funds, and USHO's portion of such fees was $112. By comparison, for the period from April 9, 2008 to June 30, 2008, these fees amounted to a total of $68,374 for all funds, and USHO's portion of such fees was $709. Directors' expenses increased for the three months ended June 30, 2009 compared to the period from April 9, 2008 to June 30, 2008, due to payment for directors' and officers' liability insurance, an increase in the compensation awarded to the independent directors of the General Partner and the longer reporting period versus the comparison period. 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.

USHO also incurs commissions to brokers for the purchase and sale of Futures Contracts, Other Heating Oil-Related Investments or Treasuries. During the three month period ended June 30, 2009, total commissions paid to brokers amounted to $2,035. By comparison, during the period from April 9, 2008 to June 30, 2008, total commissions paid to brokers amounted to $3,491. The decrease in the total commissions paid to brokers was primarily a function of a decrease in creations of units during the three months ended June 30, 2009. As an annualized percentage of average net assets, the figure for the three month period ended June 30, 2009 represents approximately 0.12% of average net assets. By comparison, the figure for the period from April 9, 2008 to June 30, 2008 represented approximately 0.09% 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. USHO seeks to invest its assets such that it holds Futures Contracts and Other Heating Oil-Related Investments in an amount equal to the total net assets of its portfolio. Typically, such investments do not require USHO to pay the full amount of the contract value at the time of purchase, but rather require USHO to post an amount as a margin deposit against the eventual settlement of the contract. As a result, USHO retains an amount that is approximately equal to its total net assets, which USHO 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 USHO'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, USHO earned $3,279 in interest income on such cash holdings. Based on USHO's average daily total net assets, this is equivalent to an annualized yield of 0.19%. USHO 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 period from April 9, 2008 to June 30, 2008, USHO earned $66,323 in interest income on such cash holdings. Based on USHO's average daily total net assts, this was equivalent to an annualized yield of 1.75%. USHO did not purchase Treasuries during the period from April 9, 2008 to 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 period from April 9, 2008 to June 30, 2008. As a result, the amount of interest earned by USHO as a percentage of total net assets was lower during the six month period ended June 30, 2009.

Tracking USHO's Benchmark

USHO 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 Futures Contract, also on a percentage basis. Specifically, USHO 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 Contract. As an example, if the average daily movement of the Benchmark Futures Contract for a particular 30-day time period was 0.5% per day, USHO's 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). USHO's portfolio management goals do not include trying to make the nominal price of USHO's NAV equal to the nominal price of the current Benchmark Futures Contract or the spot price for heating oil. Management believes that it is not practical to manage the portfolio to achieve such an investment goal when investing in listed heating oil Futures Contracts.

For the 30 valuation days ended June 30, 2009, the simple average daily change in the Benchmark Futures Contract was 0.538%, while the simple average daily change in the NAV of USHO over the same time period was 0.537%. The average daily difference was -0.001% (or -0.00001 basis points, where 1 basis point . . .