Investing in Oil

[1]

Lets suppose I think the price of oil is on the up, what is the most efficient i.e best return, easiest way to invest?

Obviously I could just buy shares in an oil company but am more interested the price per barrel. Is is possible to spread bet on the price of oil per barrel or do I have to be more specific and specify brent crude etc. I'm looking at what my options are and peoples opinions on them, rather than a debate on the price of oil!

[s2t]

Do a google search on commodity trading, oil is one of the most popular commodities traded

[marky1]

IG Index or open an account with a trading house with direct market access. WTI trades on CME and Brent is on ICE.

[1]

marky1 said:

IG Index or open an account with a trading house with direct market access. WTI trades on CME and Brent is on ICE.

IG Index?
Direct Market Access?
WTI?
CME?
ICE?

Talk to me.

[DonkeyApple]

Those are all short dated contract scenarios. If you are looking for long term exposure then open a cheap online physical broking account and buy an Oil ETF.

Funding and spread on a CFD or a Spread Bet is too much for more than a week or so.

[cailean]

You can also buy ETCs (Exchange Traded Commodities) as opposed to ET Funds

[davemac250]

Or if you want to go fund based something like CF Junior Oil Fund

[matsmith]

DonkeyApple said:

Those are all short dated contract scenarios. If you are looking for long term exposure then open a cheap online physical broking account and buy an Oil ETF.

Funding and spread on a CFD or a Spread Bet is too much for more than a week or so.

I agree spread betting and CFD's wouldn't be great for anything other than short term, but I am yet to find a great product for crude. I bought the ETF "crud" when oil was $33, and it's barely any more valuable today. I sold it a long time ago, I only held it for a few weeks, but the contango means that oil has trebled in value and the ETF based on it is still virtually the same price.

Obviously it has to be that way. If there was a way to profit from the contango (which at the time was up to 10% between months) then there would have been free money available by buying the day before the front contract switches to the next months contract.

"crdg" has risen approx 20% in the past 6 months, whereas crude is up 40% (working on the front months prices) in the same period.

So Mr DA, my question to you is; Do you know of a better product for investing in crude?

[marky1]

matsmith said:

So Mr DA, my question to you is; Do you know of a better product for investing in crude?

I don't think there is one. Same thing you are talking about has happened in Natural Gas ETF's. Everytime the contract rolls you get shafted.
Hence my thoughts if you want to buy oil just buy futures or trade on IG.

[marky1]

1 said:

IG Index?
Direct Market Access?
WTI?
CME?
ICE?

Talk to me.

I don't want to sound like an arse but before you do anything in Oil you need to do a lot of reading. It's a very tough market to trade and you'll be the last person in the world to get the information you need to trade it well. Since you started this post oil is about $8 higher....

CME - Chicago Mercantile Exchange - where WTI (West Texas Intermediate - a type of oil) is traded.
ICE - Intercontinental Exchange - can trade Brent on it.
Direct Market Access - i.e at the click of a button you buy/sell oil futures. (probably not for you)

From what you have written I would say either use IG or buy a share like BP which obviously has exposure to rising oil prices and vice versa.
IG Index - spread betting company.

[1]

Thanks for all the info.

I should also have mentioned that I'm looking at a 3-5 year investment. While I don't think now is a particularly good time to buy oil, I think over a 3-5 year period oil is on the up, or at least there will be peaks where gains can be made - providing I get in at the right point.

It sounds like most of the options mentioned are better suited to short term trading and are not necessarily directly linked to the price per barrel. I also don't particularly want to buy into an oil company as there are many other things that can effect their share price.

It sounds like ETC's or buying into an oil fund might be my best options?

[davemac250]

1 said:

Thanks for all the info.

I should also have mentioned that I'm looking at a 3-5 year investment. While I don't think now is a particularly good time to buy oil, I think over a 3-5 year period oil is on the up, or at least there will be peaks where gains can be made - providing I get in at the right point.

It sounds like most of the options mentioned are better suited to short term trading and are not necessarily directly linked to the price per barrel. I also don't particularly want to buy into an oil company as there are many other things that can effect their share price.

It sounds like ETC's or buying into an oil fund might be my best options?

There are lots of funds that will do this for you.

A good trading platform will keep your costs low.

I use this in one of the portfolios I manage

http://www.junioroils.com/wp-content/uploads/Junio...

Among other Energy/Oil funds and direct stocks.

[Chilli]

marky1 said:

From what you have written I would say either use IG or buy a share like BP which obviously has exposure to rising oil prices and vice versa.
IG Index - spread betting company.

I would be careful with this idea. Whilst BP may be an oil giant and do very nicely, they're often in the news these days and there are many others factors than the price of oil (factors which you may not even know or care about) that will affect the share price.

As above spreadbetting sites like Shortsandlongs trade Oil, generally US Light crude and Brent. A word of warning though, they can be very volatile and some of the knee-jerk reactions to news can hit your stops easily, before returning to normal. Large stop margins are required.

[DonkeyApple]

matsmith said:

I agree spread betting and CFD's wouldn't be great for anything other than short term, but I am yet to find a great product for crude. I bought the ETF "crud" when oil was $33, and it's barely any more valuable today. I sold it a long time ago, I only held it for a few weeks, but the contango means that oil has trebled in value and the ETF based on it is still virtually the same price.

Obviously it has to be that way. If there was a way to profit from the contango (which at the time was up to 10% between months) then there would have been free money available by buying the day before the front contract switches to the next months contract.

"crdg" has risen approx 20% in the past 6 months, whereas crude is up 40% (working on the front months prices) in the same period.

So Mr DA, my question to you is; Do you know of a better product for investing in crude?

Just saw this and thought it was interesting:

http://www.citywire.co.uk/money/how-to-track-the-o...

[ringram]

+1 I can vouch for etf's being crap. Bought in at $50, now only 18% up!
Either short term CFD or just go for the oil majors like OILS:LSE etc