Oil price collapse.....ETFs
Discussion
So the price of oil has collapsed under 20 dollars a barrel.
When prices last dipped into the 20s I made a few quid buying LSE:CRUD ETF and selling out at over 40 dollars.
This time however, the futures position is very bleak in the short term due to the HUGE oversupply.
My question: Why isn’t every man and his dog piling into this now, on the basis that oil prices must reach say 30 dollars at some point in the next 12 months?? Am I missing something technical about the ETF that won’t realise the gains?
When prices last dipped into the 20s I made a few quid buying LSE:CRUD ETF and selling out at over 40 dollars.
This time however, the futures position is very bleak in the short term due to the HUGE oversupply.
My question: Why isn’t every man and his dog piling into this now, on the basis that oil prices must reach say 30 dollars at some point in the next 12 months?? Am I missing something technical about the ETF that won’t realise the gains?
JPJPJP said:
Must it?
Presumably that's the key point? If there are countries that can produce oil for $10 or $20 a barrel, and at present tof the oil from those countries is enough to meet global supply, why would the price rise any higher back up to say above $30?And presumably we now have huge amounts of oil stirred which will keep the price suppressed for a while.
I really don't know much about it but just my thoughts.
DarkHorseTerence said:
So the price of oil has collapsed under 20 dollars a barrel.
When prices last dipped into the 20s I made a few quid buying LSE:CRUD ETF and selling out at over 40 dollars.
This time however, the futures position is very bleak in the short term due to the HUGE oversupply.
My question: Why isn’t every man and his dog piling into this now, on the basis that oil prices must reach say 30 dollars at some point in the next 12 months?? Am I missing something technical about the ETF that won’t realise the gains?
Can you see the curve for future prices?When prices last dipped into the 20s I made a few quid buying LSE:CRUD ETF and selling out at over 40 dollars.
This time however, the futures position is very bleak in the short term due to the HUGE oversupply.
My question: Why isn’t every man and his dog piling into this now, on the basis that oil prices must reach say 30 dollars at some point in the next 12 months?? Am I missing something technical about the ETF that won’t realise the gains?
Dec20 or Dec21 perhaps?
Bet that is not sat at sub 20.
The near end will be cheap but you have a limit on the time these ‘futures’ have to close by. If you want to roll forward, there is normally a charge.
Good luck In your endeavour, I salute you to trade pseudo oil.
Out of curiosity, what does contango mean to you? No google allowed.
My understanding - which is from reading as I have zero financial qualifications or experience, is that the these funds aren’t there to track the price of oil. The fund buys futures contracts 1 month in advance which are usually more expensive than the oil price on the day. They’re used to dip in and out of short term as a hedge, not buy and hold.
Apologies if I’m wrong, would be interested to learn more.
Apologies if I’m wrong, would be interested to learn more.
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