Oil

cson

Please note I have very little thorough understanding of the particular market just my own intuition. I presume you can buy Oil much in the same way one can buy Gold - commodities broker ???

Basically, oil is currently ~$50 a barrell. It is a finite resource and OPEC is of course making noises about cutting supply so as to whack up the price again. I can't fail but think that as a relatively long term investment, say 5+ yrs, that oil is the way to go. Surely it'll be above $100 in 5 years time again representing a doubling of your investment?

pocketdooz

cson wrote: »

Please note I have very little thorough understanding of the particular market just my own intuition. I presume you can buy Oil much in the same way one can buy Gold - commodities broker ???

Basically, oil is currently ~$50 a barrell. It is a finite resource and OPEC is of course making noises about cutting supply so as to whack up the price again. I can't fail but think that as a relatively long term investment, say 5+ yrs, that oil is the way to go. Surely it'll be above $100 in 5 years time again representing a doubling of your investment?

I agree. You will see supply tighten over the near term and demand tick up again over the 2 - 5 year horizon imo.

An easy way to bet on this is to buy the USO ETF on the AMEX. It tracks the price of WTI crude.

mike76

do irish brokers sell this or can you buy it direct?

dunkamania

You dont buy barrels of oil, you would buy futures contracts for forward delivery of barrels of oil. As these contracts come due, you have to sell old ones and buy new contracts, or else deal with 1,000 barrels of oil sitting on your front lawn. This would make it awkward to deal with over the time horizon you are suggesting.

ETF's are better suited for your needs, trading like shares, they give you exposure to the moves in oil prices. They work on the basis of the fund manager taking futures positions, and depositing the cash, and wrapping the result into an equity. ETFS have oil etf's traded in London.


Either way your stockbroker can sort you out

pocketdooz

mike76 wrote: »

do irish brokers sell this or can you buy it direct?

As an Irish person , you can open a trading account with one of the US brokerages (e.g. Ameritrade) and buy them (USO and other ETFs that Dunk is talking about - and possibly some London-based ones) through that.

Diarmuid

Be careful which commodity ETF's you buy. The older ones suffered from contago and backwardation. I think DBC (and I am sure there is an oil only equivalent) are supposed to be less impacted by these effects. (second link here) (holdings of DBC)