The global oil price is going down sharply? is it a chance to buy oil ETF? and which

dcenrie

The global oil price is going down sharply.

Does this mean it is a good chance to buy oil ETF? and which ETF is related to oil price and worthy buying?


i see there are 2 options on Davy:

- db x-trackers Stoxx® Europe 600 Oil & Gas UCITS ETF 1C (EUR) DXSD
- iShares Oil & Gas Exploration & Production UCITS ETF (GBP) SPOG

I only know the 2 are traded in EUR and GBP, but not sure which one whould be a good choice?


many thanks in advance

phantom_lord

Would you not rather buy something that's going up? There's little reason for oil to stop going down at the moment (the market is in backwardation)

That aside commodity ETF's have a large amount of tracking error and expenses, so let's say if oil does rebound by 10% you wont actually see that kind of return in your ETF.

Also you're exposed to currency risk whether you go for EUR or GBP since oil itself is priced in dollars.

I'm not sure it's the most prudent investment.

dcenrie

Thank you for the response.

What about buying a ETF in USD which is more reflected to the oil price I assume?:

- UBS (Irl) ETF plc - Solactive Global Oil Equities UCITS ETF (USD) A-dis
- iShares Oil & Gas Exploration & Production UCITS ETF

One More Toy

dcenrie wrote: »

Thank you for the response.

What about buying a ETF in USD which is more reflected to the oil price I assume?:

- UBS (Irl) ETF plc - Solactive Global Oil Equities UCITS ETF (USD) A-dis
- iShares Oil & Gas Exploration & Production UCITS ETF

Dont go for an oil price tracker, look on contango etc.

If however you want to make a bet on oil producers, an etf is the way to go, watch for expenses etc.

Also, why Davy? IG, Degiro all cheaper

One More Toy

phantom_lord wrote: »

Would you not rather buy something that's going up? There's little reason for oil to stop going down at the moment (the market is in backwardation)

That aside commodity ETF's have a large amount of tracking error and expenses, so let's say if oil does rebound by 10% you wont actually see that kind of return in your ETF.

Also you're exposed to currency risk whether you go for EUR or GBP since oil itself is priced in dollars.

I'm not sure it's the most prudent investment.

Some very good points, i dont believe it is prudent either, however the USD is gaining traction against EUR, and I believe we will see parity within 12 - 18 months so the OP might make a buck on this.

phantom_lord

dcenrie wrote: »

Thank you for the response.

What about buying a ETF in USD which is more reflected to the oil price I assume?:

It's not what the ETF is denominated in, you're always going to have exposure to EUR/USD since you use euros to invest in something priced in USD.

One More Toy wrote: »

Some very good points, i dont believe it is prudent either, however the USD is gaining traction against EUR, and I believe we will see parity within 12 - 18 months so the OP might make a buck on this.

If USD strengths it'll be a drag on the oil price. I don't think retail investors stand a chance in the FX market but no reason to use oil as a proxy if you just want FX exposure!