Best Way of 'buying' oil ?

Funkyzeit

Hi Folks,
Would like to invest a small amount in oil over the coming months. I would like to be able to invest in it medium/long term

I've tried spreadtrading - the problem here is the trades only allow 1/2 months before they expire.

Am I right in thinking CFD's might be a better option - do they allow a rolling investment (i.e no or long contract dates)?

Is another potential option ETF's ? If so any good links for reading?

Any help/pointers much appreciated.

pocketdooz

Check out the ETF called 'USO' that rades on the AMEX - it tracks the WTI oil price


Alos, check out previous threads - this question has been answered a few times. Just search for "oil" etc.

Good luck



.

Bytheway

I also agree that oil will be a great mid to long term bet.
ETFs are by far the best way to gain exposure to the oil index. Have a look at ETF Securities also.
I will be buying an ETF in oil, but maybe in the next 3 - 6 months depending on the outlook , I'll be buying oil service companies and oil companies also. (I am expecting a big sell off in shares this year and am very bearish for the first half at least to 3/4 of this year)
Faroe Petroleum (FPM) looks like an excellent investment but has climbed a lot in the last 6 days.
Have a look at the graphs for oil service companies vs price of oil, if possible add BP, BG in and Lamprell, Hunting.

BP is a huge oil company with an attractive dividend and is a typically big oil producer. It doesn't deviate hugely.
Lamprell(LAM) is in the oil service industry. When oil is increasing, oil service companies rise 2 or 3 times higher than typical oil companies over a few years.
Granted there is more predictability in big safe oil producers like BP, BG, Exoon Mobile, Shell etc but for me, my money is on the service companies.
Other good service companies are Hunting, Hamworty(HMY), Wood group (John) and Bateman Litwin (BNLN) (over sold).

As oil increases, good long term bets are Green Dragon Gas (GDG) and other companies who deal in unconventional hydrocarbonshy CTL and GTL and Coal Bed Methane. (see investors Chronicle 2-9 Jan).

If all of this sounds off putting, than you would be better off in a fund like pocketdooz advised which tracks crude oil which could be a lot safer than investing in individual stocks.

* All of the symbols i gave are found on Yahoo finance.

Funkyzeit

Thanks folks,
I've done a fair bit of research and will probably go with USO ETF via Ameritrade. Just one final question.

What are the tax implicatons of buying an American based ETF? I am aware if I fill in a w8-BEN form that any divs will only be charged at 15% tax but what are the tax implications for any gains on the fund I (might) make ?

Thanks again!

Bytheway

If the dollar gets weak, how would this effect the price of a barrell of oil.
Would the price of a barrell go up, as the cost of importing it would increase ?

If I invested in an ETF that followed Brent Crude Oil in pounds, how would this be affected if the dollar weakened ?
I guess the price would be affected by the price of the dollar and the price of oil. If the dollar weakened, the price of the barrell of oil would go up but the exchange rate would not be in my favour so they both might cancel eacher other out ???
Can anybody shed any light ?

marathonic

I was considering buying USO and had actually sold Put options expiring this month at a $23 strike.

I sold them on Jan 29, 2009 at $95 dollars each - received $188.60 after commissions. However, I read up a little on the Contagno and it's affects (which I don't fully understand). Therefore, I bought the Puts back at $45 each last week - paid $91.40 after commisions. I've since added to my shares in PBR.

I may look at USO again - or possibly USL