How do i invest into the Crude Oil Market?

Question

I notice that the oil prices in the stock market always, ALWAYS go up and figured i might as well get into this "gold rush" since clearly there is no sight of it abating...so can someone tell me how i can go about investing into this...are there mutual funds, or specific stock picks here in Canada that i can research and invest into?

To me, it seems like more a sure thing in earning 10+%/year without any concern

Answer 1

d**n! tough question dudey! well.. i've always thought that maybe if u had like A LOTTTT of money u cud like.. i dunno! BUY a lot of OIL now.. and wait like 3 years and sell it at a much more expensive price! ahahaha! but u would need tons of money and a place to keep the oil u bought to do that =S hehe!

I hope I answered your question my friend...

Answer 2

Hmmm...well, let me tell you that only ten years ago crude oil prices were trading at $10 per barrel after a long bear market in crude.  This bull market in crude will end at some point, in spite of all the dire predictions.  

However, if you are still wanting to invest in the market, you can invest in individual stocks, mutual funds that focus on the energy sector, Exchange Traded Funds that focus on the energy sector, or even Crude Oil options and futures themselves.  

Whatever you do, do not chase the market at these levels.  I just wrote in another post that I believe the market has entered a bubble phase.  The bubble phase can certainly last a while longer, and prices can go up much further, but bubbles are very risky to trade.  Remember the tech boom in the late 1990's?  Energy stocks are looking the same way now.

Scott Cole

www.kungfutrader.com

www.bestdaytradingstocks.com

Answer 3

This is known as commodity market

Open a cccount with broker haveing this fascility, e.g.

gci

cms

Answer 4

There is never a "sure thing".  Just be aware of the risks as well as the reward.

In Canada, the best oil equities are the Canadian Royalty Trusts, known simply as CANROYS.

Many pay monthly dividends, and you also enjoy the share price appreciation.  Go to the Toronto Stock Exchange and look up these securities.

Answer 5

You can invest in the crude oil market indirectly (by buying shares of companies such as Exxon or an ETF that tracks these companies such as DIG) or directly.  A side note is that DIG is an ultra ETF (as opposed to DUG which is an ultra-short).  The ultra ETF will attempt to track the price of the oil/gas companies market by a factor of 2.  The ultra short works the opposite, so if the oil sector goes down 1%, you would make 2%.  By investing indirectly, you are probably more exposed to the general economy of the United States.  As such, if our economy is doing spectacular and the price of crude oil rises, you will probably outperform the rise of crude oil alone.  I believe this was actually the case until this past year.  

However, what you are probably asking about is the more direct approach, through buying oil futures.  This can be accomplished by purchasing ETFs that track the price of crude oil through the use of buying/selling futures.  You can either bet for the price of oil going up, or for the price of oil going down.  To my knowledge, there are no "ultra" ETFs that will provide you with a leveraged position in crude oil futures.  DCR allows you to bet that the price of oil will go down.  If crude drop by 1%, you would make 1%.  There are 4 ETFs/ETNs that will bet for the price going up (if oil goes up 1%, you make 1%).  They are: UCR, DBO, USO, OIL.  USO is the most popular and heavily traded of these, and its volume was 33 million today.  

When doing your homework on these ETFs, always remember to check how the current price compares with the NAV (to make sure you are aware of any premium/discount you are getting).  Also, remember to check to see how accurately these ETFs actually succeed in tracking the price of oil.  Hopefully this helps.  Good luck.  

In full disclosure, I own USO.

Answer 6

here's a better investment. BQI