Is oil futures a safe investment, in this economy?

Question

I am being told that buying a few dollars of futures can make one some extra bucks, is this so?

Answer 1

No, the futures market is anything but safe.

Honestly, if you have to ask this question on Yahoo, you really should NOT be buying/selling commodity futures contracts.

Answer 2

yes, buying futures can make someone extra bucks.  The problem is leverage.  I think you only need to put up 2% for the contract so if you are wrong you could be on the hook for  much more than  you put it.

If you don't understand what a futures contract is you should stay away.  If you want a lower risk way to trade oil you could check out an ETF.

Answer 3

Futures are not "safe" - they are high risk by their nature.

Answer 4

i think so too. OPEC( organisation of petrolium exporting countries) is the single largest lobby in this world.in long run the oil prices are sure to increase as the demand is skyrocketing and the resources are not increasing or rather say 'limited'.follow the basic rules of supply and demand , u wont regret it.although the price is expected to stabilize as the inflation goes down , it will be a safe bet if the investment is for long term.

Answer 5

Yes and no.

Yes -- if you are trading oil and know what you are doing, then oil futures may be an option. Also, you could buy a small amount of futures to "freeze" the price of oil, a form of hedging.  If oil goes up to $200, then the futures gains will offset the extra pay at the pump.  At the same time, if it goes down to $90 a barrel, your losses from the future will offset the money you are saving at the pump.  It is your decision whether you feel the risk:reward is worth hedging.

No -- futures are always an extremely leveraged, risky investment.  No future will ever be a safe investment, and you can guarantee that.  If you ever do invest/trade in futures, it should be at a time when you know a lot more than you do about them right now (inferred from you "being told" about it).  You can learn some valuable information at investopedia.com and thismatter.com to start.  There are more specialized and descriptive resources around the web as well.

Good luck.

Answer 6

In the short term, maybe, but oil prices are likely increasing due to speculation - the same force that just drove housing prices up.  Currently oil prices have been declining.  I wouldn't spend anything I coldn't afford to lose on this investment.

Answer 7

Any futures trading is for experts. If you need to be asking about them on this forum, then to be honest, they're not for you at this stage.

I worked very successfully on the trading floor of an oil major for almost 2 decades - I don't work there any more, but I wouldn't trade them on my own account now. Its one thing doing it with the backing (and bank balance) of a multinational - its quite another thing when the downside risk is all yours. I know very few professional traders who would trade on their own account once they leave their present company (they are generally precluded from trading on their own account whilst working for a trading company by SEC regulations). Think very carefully before you start throwing money at this market.