Everything You Need to Know About Investing in Oil

Overview

Oil investing is a very lucrative business. Every day 98 million barrels of crude oil is pumped from the ground by the oil industry. Per WTI (NYMEX) Price of crude oil as of September 11, 2018 is $67.74. That is a large gain over the price of crude since one year ago when crude stood at a price of $50.00. Over the past 5 to 10 years, crude oil had many price fluctuations that range from up to $30.00 to $110.00 and now stands at $67.74. Careful observation of the oil market prices and market trends is crucial with deciding when and how much to invest. Of course, it is always best to decide on investing a portion of the money you set out to invest and diversification is always wise as you never want to place all the eggs on one basket. As a savvy investor, you have many options on which to invest including metals, gold, agriculture, gas, and oil. Crude oil far surpasses all of the other commodities in trading value when you consider that oil trade value is at $2.5 trillion per year globally.

Investment Options

Investors in crude oil have various trading channels at their disposal. They can choose to invest via oil futures contracts, mutual funds, exchange-traded funds (ETFs), and oil and gas stocks. Investors can research how the oil market is doing in terms of value and growth by using ‘Heat Maps’. “Heat Maps translate raw, complex financial data into visual maps by presenting live, colorful pictures that dynamically change in real time”. (https://www.nasdaq.com/markets/heat-maps.aspx). After you access the Heat Map provided by Nasdaq, you can click on the section that is labeld “energy”, then you may hover your computer mouse and click on the individualized colored squares to see which ETF is moving forward in price and which ones to avoid. Per 9-11-18, the preferred ETFs to consider investing in due to recent growth are:

UCO Bloomberg WTI Crude Oil Subindex 30.5399 (0.1999) up by 0.66%
OILU Bloomberg WTI Crude Oil Subindex 51.48 (0.34) up by 0.66%
BNO Brent Crude Oil 21.76 (013) up by 0.6%
USO WTI Crude Oil futures at NYMEX 14.26 (0.05) up by 0.35%
DBO DBIQ Optimum Yield Crude Oil index Excess Return 12.42 (0.04) up by 0.32%

Summary: Investment Forecast

Global crude oil demand is expected to continue rising causing prices to surge. Investors should seriously consider investing in crude oil as energy analysts predict 2018 global oil demand will average 99.2 million barrels per day. Investors should understand that the oil industry’s health is best when oil supplies match demand. This way crude prices are kept high enough and producers can generate enough profit to invest in the wells that are needed to offset a decline from older wells. They also need to drill new wells to meet increasing demand. The best advice is to invest wisely and mainly on consistently progressing investment vehicle choices.

Invest Better is a blog for all your latest investing news and tips!