Investing: buy barrels (shares) of oil?

Question

Is it possible to invest in oil? Not in the oil companies, but in oil itself? Can I buy barrels of oil, say when a barrel costs $50 and sell it again when the price of oil peaks? I am not talking about really buying 55 gallon drums of the stuff and storing them in my basement. I am talking about "shares" of oil. Like shares of stock. You can invest in gold and silver right? Where can I invest in oil?

Answer 1

Crude oil is a commodity and yes, you can invest in it. Call a good commodities broker and he/she can assist you. Remember, buy low/sell high and the price, although influenced buy supply and demand, is controled by OPEC because they control production. It's very risky and if you've never invested in commodities before you might try something a little safer like sugar. Also, the minimum investment is $20,000.

Answer 2

Buy Barrels Of Oil

Answer 3

Their are various banks and building societies that have share buying account options. You invest money into an account and can then buy and sell shares as you please in real time on the internet. Barclays and Halifax are just two of many available or go to a stock broker.

Answer 4

This penny stock service has years of proven experience. Ultimately it is the best service for beginners to use https://tr.im/hXhxZ
You will have to wait between 3 and 10 days to get into the system in most cases. When I signed up it took 8 days. I wished it was faster, but if you can wait a week or two to start earn life changing money than you will have what it takes to make it in this business.

Answer 5

1

Answer 6

You can, but its risky and foolish for an amateur investor. If you don't sell them in time, they will deliver the oil to your front door. Where are you going to put it?

Answer 7

Very good question, hopefully we will get some good replies

Answer 8

I too want to ask the same question

Answer 9

How To Invest In Oil & Gas
by Dr. Steve Sjuggerud, with Matt Badiali
May 30, 2006

T. Boone Pickens made $1.4 billion dollars in income in 2005 from managing money, according to an article in last week's Wall Street Journal.

It is "the largest one year sum ever earned… larger even than Michael Milken's legendary $550 million haul of 1986…" according to Trader Monthly.

In case you don't know, T. Boone Pickens is an oil investor… and a good one at that…

For the year 2005, folks who invested in Pickens' oil stock fund made over 100%. And those who invested in his much riskier commodities pool made over 700% (that's not a typo).

Pickens appeared on CNBC last week. He predicted higher oil prices. And he says that natural gas is a cheap and credible alternative for oil investors. He also predicted that gas stations serving natural gas is something we might see in the not-so-distant future.

Pickens made his money last year investing in oil stocks and trading commodities. If he can make over $1 billion doing this stuff, then we need to know what our options are for investing in the oil patch…

Here are the major ways to play it:

1) Investing in oil through your brokerage account.

The simplest and most direct way for most people to make a bet on the price of oil is by investing in shares of USO (the U.S. Oil Fund). USO is not a company, it's simply an asset created to track the price of oil. Investors can buy it like a stock.

Your return with USO is simply whatever the price of oil does, minus a tiny fee. If you're interested in investing in oil, this the easiest way to do it.

2) Investing in oil stocks.

You can make or lose a lot of money investing in oil stocks, depending on how much risk you're willing to take…

You can buy the Big Oil stocks… like ExxonMobil (XOM) and ConocoPhillips (COP), which are safe and diversified. Or you can really take a risk by investing with a small oil stock that specializes in exploration or operates in a risky locale. You could lose it all, or make many times your money.

You've got a lot of choices when it comes to investing in oil stocks… and we'll cover these choices in the coming weeks.

3) Investing in the whole oil sector with just one stock.

There are a handful of exchange-traded funds (ETFs) relating to oil. These hold a handful of the major oil and energy companies. The major ETFs here are OIH, IXC, IYE, XLE, and VDE. The easiest place for oil investors find more information about all of them is at www.etfconnect.com.

There are hundreds of mutual funds as well. But we prefer investing in exchange-traded funds, like the ones above. The cost of ownership is lower, and you can buy and sell them any time through the day.

4) Gambling the T. Boone Pickens way: Investing in oil through derivatives.

Trading oil futures, in general, is extremely risky. You can't make 700% returns without taking on a heck of a lot of risk.

I really don't recommend this world for most individual investors. One firm that has done a nice job in the past for newer oil investors is Lind-Waldock.

Spend a while educating yourself before investing here. Sue Rutsen is incredibly nice and patient, and specializes in commodities options. You can find more about her and her firm at: www.rmbgroup.com.

5) Investing in oil and gas limited partnerships.

We know many legitimate folks out there (like our friend Cactus Schroeder) that have been creating these types of oil investments and making money for investors for many years. However, we're particularly skeptical of these, and really don't recommend investing in oil this way.

In general, unless you REALLY KNOW what you're doing, then you probably shouldn't invest in oil and gas limited partnerships.

Well, we've just scratched the surface today on the options available for investing in oil. This is by no means a comprehensive list. At DailyWealth, we promise we won't take too much of your day, so we're going to stop here.

In the weeks to come, we'll fill in the gaps, and give specific ideas for investing in oil. Before we got that far, we wanted to give you a quick overview of what's out there.
More on Chris Weber

Three Oil Sand Investments No One's Thought Of

Close to an Oil Top? Not Even Close
How To Invest In Oil Right Now

While we can't promise T. Boone Pickens-like returns, we do think we can steer you in the direction of the safest, smartest ways to invest in oil in the coming weeks.

Good investing,

Steve & Matt http://www.dailywealth.com/archive/2006/may/how-to-invest-in-oil-and-gas.asp#

More about ETFs: ETFs Bring the Bling
By Zoe Van Schyndel, CFA December 12, 2006

0 Recommendations

Want to add some shine to your portfolio -- some bling, perhaps? You're in luck. Commodity ETFs now come in gold, silver, and black -- as in oil -- and some even track a diverse basket of commodities. Compared with your typical ETFs, these funds track very distinctive types of investments, ones with market cycles and histories unlike any of your other holdings. And that makes these funds, for the most part, well suited for truly diversifying your portfolio.

Add some glitter to your portfolio
For the past couple of years, gold has been, well, golden as an investment. In late 2004, the streetTRACKS Gold Shares Fund (NYSE: GLD) became the first ETF that tracked a commodity. This fund gives investors a cheap and easy way to invest in gold and has accumulated billions of dollars in assets. Success breeds imitators, and in early 2005, Barclays Global Investors followed up with its own gold fund -- the iShares COMEX Gold Trust (AMEX: IAU). (Glad they didn't use the ticker IOU.)

In April 2006, Barclays provided investors another opportunity to shine up their portfolios when it launched the iShares Silver Trust. The SLV fund can be traded just like any other ETF, while the precious metal that the fund holds is safely secured in a vault.

Black gold ... Texas tea
As crude prices surge on concerns over supply and demand, don't you want to benefit the way the big oil companies have? Until recently, you could buy energy ETFs such as the PowerShares Oil Services Fund (AMEX: PXJ) or the Energy Select Sector SPDR (AMEX: XLE). However, these funds are still subject to the stock market's random swings and the earnings of the companies that make up their portfolios -- factors not directly tied to the price of crude oil.

Now, there's the United States Oil Fund (AMEX: USO), which provides direct access to the performance of crude oil by investing in energy-futures contracts and other similar instruments. USO allows investors to take a long position in the commodity by purchasing the fund, or hedge against losses by shorting it. Individual investors have had access to mutual funds that invest in energy companies, but this oil ETF provides far more direct exposure to crude prices. Now you, too, can profit like an oil baron when the cost of petroleum rises.

Diversity is nice, twice
Two other ETF options exist for investors who want a more diverse basket of commodities than just oil: the PowerShares DB Commodity Index Tracking Fund (AMEX: DBC), launched by Deutsche Bank in January 2006, and the iShares GSCI Commodity-Indexed Trust (NYSE: GSG), from Barclays six months later. The differences between the funds might sway your preference to invest in one or the other: DBC tracks a Deutsche Bank index made up of six commodities, while GSG follows a Goldman Sachs index that holds 24 commodities. At first blush, GSG might seem to be more diversified than DBC. That's a bad assumption, though, since the index that GSG follows weights commodities by world production. That means that GSG currently has close to a 75% stake in energy, much more than DBC at around 50%.

With their concentrations in oil and energy, these funds offer a way to play the energy market. However, their real value is that they open the door, at a low cost, to a broad basket of commodities. That adds diversification to an investment portfolio from a market that was previously closed, or difficult to get exposure to, for most investors.

Potential risks
Commodity markets are marked by longs and shorts, and unless you're able to short commodity ETFs, you're deprived of the full benefits of these securities. But don't take shorting ETFs as a given, since it's usually difficult to short anything other than the largest funds. Keep in mind also that market prices of commodities also tend to be driven by supply-and-demand factors, both real and perceived. Unlike stocks, commodities have no earnings per share or other fundamentals to drive prices. Instead, commercial hedging activities and speculators tend to dominate the commodity markets. Gold price fluctuations, in particular, can be driven by speculators and governments selling off their stockpiles.

Even with their risks, commodities have such low correlations to U.S. equities or bonds that adding them to your portfolio can reduce volatility and increase your returns. As with all investments, some commodity ETFs might turn out to be fool's gold, just pure glitter, while others are the real thing. Learn about the risks involved before you invest.

To learn all about ETFs, visit our ETF center. http://www.fool.com/etf/etf.htm

http://www.fool.com/investing/etf/2006/12/12/etfs-bring-the-bling.aspx?terms=crude+oil+commodity&vstest=search_042607_linkdefault