Quickest cheapest safest way to invest in crude oil

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tonster01

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Exactly as it says on the tin...

Dont mind if I go long term or short term (just going to ride the wave)...I'm not investing a huge amount but enough to make a small return if it does increase.

So should I use Davy, Zecco.com...any of the other companies spoke of here?

Is there anything specific I should be aware of when investing in Oil?


Thanks
 
Although ther trend is up probably to well over $100 pb this is a highly volatile commodity. If you're thinking long term I'd buy a diversified fund in the natural resources sector and let the pros decide on the allocation across oil, gas, metals and other commodities including gold. I use the JP Morgan Natural Resources Fund for this exposure.
 
Another option, particularly if you're investing small amounts, might be the Blackrock/Merrill Lynch World Energy Fund available through Rabodirect.

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The only way I'd invest in oil is to fill my home heating tank with 2000L. The comodity goes on the boil then off the boil and so on so forth. As a long term play, there are other sectors such as softs etc showing more potential for an upswing.
 
tonster01 said:
Dont mind if I go long term or short term (just going to ride the wave)...
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[FONT=&quot]Wasn’t this the investment strategy of Homer Simpson when he invested in pumpkins when their price increased dramatically (in the run up to Halloween)?[/FONT]
 
Oil is over €90 per barrel, world demand is pushing up at a rate of 1.5 million barrels of oil a day per year. Max production is probably 90 to 100 million bpd and we're currently at 86 million bpd so, fundamentally oil is still underpriced. I expect it to go over €100 per barrel next year and lift eventually to over $200 well above the futures market. Gold is following the oil-led inflation story.
 
piglet said:
Oil is over €90 per barrel, world demand is pushing up at a rate of 1.5 million barrels of oil a day per year. Max production is probably 90 to 100 million bpd and we're currently at 86 million bpd so, fundamentally oil is still underpriced. I expect it to go over €100 per barrel next year and lift eventually to over $200 well above the futures market. Gold is following the oil-led inflation story.
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Agreed. However, along the way, this hike in oil prices is going to be damaging to the global economy, particularly when it rises quickly in a short space of time. This will have a recessionary effect and result in some dramatic drops in the demand for, and price of, oil. These drops will be temporary, but oil could hit $50 again before it hits $150.

Volatility is the future in the world of investing. Fasten your seatbelts folks!
 
One way of investing is to use future contracts - this will require that you do a lot of research on your commodity. I currently hold agriculture and currency futures contracts that I roll forward before every expiry month.

In the case of oil you can currently buy a mini futures contract for crude oil. For example, a mini contract for oil in December 2012 is currently priced at $75.25 per barrel (The Jan 2008 contract is $86.675 per barrel as I write). The contract size is 500 barrels.

To buy future contracts you need to put down a "deposit", in this case it will be approx. $2000. If the price of Dec 2012 rises by $10 per barrel to $85.25 per barrel then $5,000 will be transfered to your account; but the sting in the tail is that if Dec 2012 oil falls to $65.25 per barrel then you will have to transfer a further $5,000 to your commodities account. This will be settled daily.

If you are really bullish on oil then futures contracts are probably the best way of speculating; however, with the significant upside comes significant downside risk.
 
Del3D said:
One way of investing is to use future contracts - this will require that you do a lot of research on your commodity. I currently hold agriculture and currency futures contracts that I roll forward before every expiry month.
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Longdated mini-contracts are very thinly traded and illiquid. As a consequence they are prone to huge jumps in price, which may cause difficulties for investors. If you continually purchase and roll forward front month oil contracts then you will be crucified by contango. Since 2005 something in the order of 10% appreciation in the underlying commodity price has been required to cover contango.

At the moment however, oil futures contracts are in backwardation.
 
Is there a way to invest in Oil companies or companies that are rich in Oil reserves or stocks rather than investing directly in Oil as a commodity??

And what kind of companies benefit most by a rise in Oil prices? My gut instinct tells me that it should be the refining and drilling cos such as BP, Exxon, Shell, etc but I'm not certain on this- does anyone know??
 
Would you consider investing in CAD/JPY as an alternative to Crude? As well as requiring less margin, you will also gain interest on your positions.

There are plenty of articles around which show the correlation between CAD/JPY and oil.
 
Well conoco philips is one oil company owned by warren buffets berkshire hathaway one of only two oil companies they own. Also conoco phillips owns the oil refinery in cork which gives it an irish connection
 
companies with good exposure to natural gas is also a good play because natural gas has actually fallen alot in the last year from its peak the opposite to crude, however natural gas is as important as crude especially for ireland where our electricity generation is heavily dependant on it, this is why buffet has invested in conoco
 
also our electricity bills have actually fallen in the last year this is due to our dependance on gas, this is another good reason to invest in gas companies because they will now be relatively cheap and the future is as bullish as oil
 
Daithi7 said:
And what kind of companies benefit most by a rise in Oil prices? My gut instinct tells me that it should be the refining and drilling cos such as BP, Exxon, Shell, etc but I'm not certain on this- does anyone know??
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The problem with the likes of BP & Exxon etc. is that they're involved in the oil business from exploration to the forecourt. So a high oil price is good for their drilling business as oils is the product they're selling. However oil is a cost to their refining business so the profits on drilling are lost again on refining.

Pure exploration or oil services companies such as Schlumberger might be a better bet when supplies are looking tight. Or maybe consider investing in new energy technologies which generate a lot of interest when oil is looking expensive.
 
Is it possible to buy Oil on the market by the Barrell? i.e. not through an Oil exploration company just plain Barrels of Crude?
 
Buy a big oil stock which isn't leveraged up to the eyeballs.

BP would be my pick as it isn't reliant on high oil prices to stay profitable.
 
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