Author Topic: Ways to invest in OIL  (Read 4807 times)

haggard

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Ways to invest in OIL
« on: January 13, 2018, 08:34:20 AM »
I am looking for ways to invest in oil, crude WTI and Brent mainly.  I have purchased some USL lately but thats it thus far.  I am looking for any other advise you guys may have or know of ways to invest in oil anticipating a steady incline in the cost of crude, exploration, drilling, fracing, etc going up this year. 

BTDretire

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Re: Ways to invest in OIL
« Reply #1 on: January 13, 2018, 10:20:51 AM »
I am looking for ways to invest in oil, crude WTI and Brent mainly.  I have purchased some USL lately but thats it thus far.  I am looking for any other advise you guys may have or know of ways to invest in oil anticipating a steady incline in the cost of crude, exploration, drilling, fracing, etc going up this year.

 Why are you avoiding the oil company stocks?
Also Schlumberger SLB.  An oil services stock.
https://seekingalpha.com/article/4136113-schlumberger-case-priceless-recovery

MrSpendy

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Re: Ways to invest in OIL
« Reply #2 on: January 13, 2018, 11:21:00 AM »
Speculating in commodities is not a well trod path to wealth. If you must, interactive brokers offers trading in futures and mini-futures to efficiently do so. Don't blame me if/when you lose $.

Financial.Velociraptor

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Re: Ways to invest in OIL
« Reply #3 on: January 13, 2018, 12:26:37 PM »
The service companies usually track with the price of crude but that relationship has broken down lately.  There is probably an opportunity weatherford, slumberger, halliburton, and bakerhughes/ge.

Rockies

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Re: Ways to invest in OIL
« Reply #4 on: January 13, 2018, 07:01:41 PM »
The energy sector has notoriously bad long term returns and is horribly volotile. You can try to trade oil in the short term but if you think about it, it really hasn't gone anywhere in the long run. I remember many many years ago when a barrel of oil cost more than it does today. You can rarely say the same thing about the stock market as it tends to increase cyclically.

 I personally invested about 0.5% of my portfolio in OIH (oilfield services ETF) a few years ago and it has been a loser and I recently dumped it, but I am probably biased because of that experience. You hold enough exposure to oil in your S&P500 ETF to total market funds in my opinion.

boarder42

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Re: Ways to invest in OIL
« Reply #5 on: January 14, 2018, 04:52:06 AM »
Oil is on its way out. Nothing like timing a market poorly.

Invest in vtsax and move on about your life.  Electric cars are rapidly in the rise. Which will decrease oil demand by 30%.


haggard

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Re: Ways to invest in OIL
« Reply #6 on: January 14, 2018, 05:08:49 PM »
Oil is on its way out. Nothing like timing a market poorly.

Invest in vtsax and move on about your life.  Electric cars are rapidly in the rise. Which will decrease oil demand by 30%.

I appreciate your and everyone else input.  I am extremely new to this and will take any help I can get.  However, I am very interested in investing in oil for the short run. I may lose my ass I know, but I think over the year of 2018 if I can get enough info on the investing side of things I can make some good gains here. 

boarder42

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Re: Ways to invest in OIL
« Reply #7 on: January 14, 2018, 06:32:30 PM »
Oil is on its way out. Nothing like timing a market poorly.

Invest in vtsax and move on about your life.  Electric cars are rapidly in the rise. Which will decrease oil demand by 30%.

I appreciate your and everyone else input.  I am extremely new to this and will take any help I can get.  However, I am very interested in investing in oil for the short run. I may lose my ass I know, but I think over the year of 2018 if I can get enough info on the investing side of things I can make some good gains here.

Just know youre not investing you're gambling. And this isn't a forum that will give you much advice on how to gamble on oil. Or anything else

BTDretire

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Re: Ways to invest in OIL
« Reply #8 on: January 14, 2018, 08:13:28 PM »
Just two years ago oil was under $30 a barrel.
 Now that it's $64 you're looking to get in?
 I suspect it's just to the point where domestic suppliers will start
pumping and drilling for more and soon the big sellers will open
their spigots and reduce the price.
  It may take a year ot two, but it's coming.

aspiringnomad

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Re: Ways to invest in OIL
« Reply #9 on: January 14, 2018, 08:36:52 PM »
Is there a reason you think you know more than the broader market about crude oil? Without googling, do you understand contango and backwardation? If not, there's a 100% chance that you do not know more than the market, and even if you do, the odds of you knowing something the market doesn't are still prohibitive.

But that's not to say you can't beat the market through some blind luck. And if gambling's your thing might as well go big: OILU from ProShares gives you 3x leveraged long exposure to WTI sweet, light crude futures with a 0.95 ER. Good luck!

haggard

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Re: Ways to invest in OIL
« Reply #10 on: January 14, 2018, 09:22:47 PM »
Oil is on its way out. Nothing like timing a market poorly.

Invest in vtsax and move on about your life.  Electric cars are rapidly in the rise. Which will decrease oil demand by 30%.

I appreciate your and everyone else input.  I am extremely new to this and will take any help I can get.  However, I am very interested in investing in oil for the short run. I may lose my ass I know, but I think over the year of 2018 if I can get enough info on the investing side of things I can make some good gains here.

Just know youre not investing you're gambling. And this isn't a forum that will give you much advice on how to gamble on oil. Or anything else

Im not placing money on red while a dealer spins a wheel to drop a ball... 

I'm doing the same thing you believe in with cleaner energy ideas.  I believe you will see oil will be drilled in the states to the tune of a small boom over the next year. My hunch started around sept from info I know.  Wish I would have acted then, so I'm a little late.

I think the exploration, drilling, and service companies will all years the best their last 2-4 in performance and be very busy throughout 2018

haggard

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Re: Ways to invest in OIL
« Reply #11 on: January 14, 2018, 09:31:14 PM »
Is there a reason you think you know more than the broader market about crude oil? Without googling, do you understand contango and backwardation? If not, there's a 100% chance that you do not know more than the market, and even if you do, the odds of you knowing something the market doesn't are still prohibitive.

But that's not to say you can't beat the market through some blind luck. And if gambling's your thing might as well go big: OILU from ProShares gives you 3x leveraged long exposure to WTI sweet, light crude futures with a 0.95 ER. Good luck!

I'm not thinking I know more than the market.  Im telling you exactly what I believe and the market is already aware.  Im merely trying to get in early and sell for a profit.  If I can turn 15% profit I'm tickled, if more great!   But I just don't see it going backwards for the year 2018.  Like mentioned, drilling, fracking, service companies, etc are all making in investments and commitments to 2018 being a great year for them. 

Wintergreen78

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Re: Ways to invest in OIL
« Reply #12 on: January 14, 2018, 09:46:08 PM »
im curious how you think the following will impact WTI and Brent prices over the next 6-12 months:

1. Floating storage totals.
2. OPECís commitment to supply cuts.
3. Russiaís production and whether they begin marketing more to China.
4. Will the current administration approve pipelines for heavy Canadian crude? If it does, will refineries retool to switch away from WTI?
5. Will the administration open up more onshore public lands to drilling and speed up approvals for new wells?

There are people who make it their full time job to speculate on oil prices. They spend all day researching anything and everything that could possibly impact prices. Some of them are very smart. Even the smart ones get things wrong and lose money. What is your advantage?


boarder42

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Re: Ways to invest in OIL
« Reply #13 on: January 15, 2018, 04:33:29 AM »
Oil is on its way out. Nothing like timing a market poorly.

Invest in vtsax and move on about your life.  Electric cars are rapidly in the rise. Which will decrease oil demand by 30%.

I appreciate your and everyone else input.  I am extremely new to this and will take any help I can get.  However, I am very interested in investing in oil for the short run. I may lose my ass I know, but I think over the year of 2018 if I can get enough info on the investing side of things I can make some good gains here.

Just know youre not investing you're gambling. And this isn't a forum that will give you much advice on how to gamble on oil. Or anything else

Im not placing money on red while a dealer spins a wheel to drop a ball... 

I'm doing the same thing you believe in with cleaner energy ideas.  I believe you will see oil will be drilled in the states to the tune of a small boom over the next year. My hunch started around sept from info I know.  Wish I would have acted then, so I'm a little late.

I think the exploration, drilling, and service companies will all years the best their last 2-4 in performance and be very busy throughout 2018

You're not doing the same thing I'm doing with clean energy bc I'm not trying to invest in what I believe the market will do bc I have no idea.

To pick a sector and try to beat the market with it you have to think you know more than the market. You have to think that sector is miss priced. And that all the guys on wall street are wrong about how they priced it.

haggard

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Re: Ways to invest in OIL
« Reply #14 on: January 15, 2018, 07:37:55 AM »
Oil is on its way out. Nothing like timing a market poorly.

Invest in vtsax and move on about your life.  Electric cars are rapidly in the rise. Which will decrease oil demand by 30%.

I appreciate your and everyone else input.  I am extremely new to this and will take any help I can get.  However, I am very interested in investing in oil for the short run. I may lose my ass I know, but I think over the year of 2018 if I can get enough info on the investing side of things I can make some good gains here.

Just know youre not investing you're gambling. And this isn't a forum that will give you much advice on how to gamble on oil. Or anything else

Im not placing money on red while a dealer spins a wheel to drop a ball... 

I'm doing the same thing you believe in with cleaner energy ideas.  I believe you will see oil will be drilled in the states to the tune of a small boom over the next year. My hunch started around sept from info I know.  Wish I would have acted then, so I'm a little late.

I think the exploration, drilling, and service companies will all years the best their last 2-4 in performance and be very busy throughout 2018

You're not doing the same thing I'm doing with clean energy bc I'm not trying to invest in what I believe the market will do bc I have no idea.

To pick a sector and try to beat the market with it you have to think you know more than the market. You have to think that sector is miss priced. And that all the guys on wall street are wrong about how they priced it.

No not at all.   I don't think I am smarter than any of them.  I believe you will just see a gradual increase in oil pricing over the year. 

haggard

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Re: Ways to invest in OIL
« Reply #15 on: January 15, 2018, 09:17:18 AM »
im curious how you think the following will impact WTI and Brent prices over the next 6-12 months:

1. Floating storage totals.
2. OPECís commitment to supply cuts.
3. Russiaís production and whether they begin marketing more to China.
4. Will the current administration approve pipelines for heavy Canadian crude? If it does, will refineries retool to switch away from WTI?
5. Will the administration open up more onshore public lands to drilling and speed up approvals for new wells?

There are people who make it their full time job to speculate on oil prices. They spend all day researching anything and everything that could possibly impact prices. Some of them are very smart. Even the smart ones get things wrong and lose money. What is your advantage?

Let me expand a little bit as well now that I'm not on my phone.

Oil always seems to rise as the economy is doing well.  The economy always has a fix after a good rise, this we all know and it will happen at sometime.  If you take a glance at each of these things, Oil tends to ride out that correction and often holds.  By getting "down" correctly on oil I am also hoping to be ok when this thing takes a market correction.  So here is my outlook;

I think oil/serv companies/drilling comp/exploration/etc all will see a nice spike this year in business, revenue, and profit.  If there is a market correction to be had in the near future (year or so) investing in oil seems to not be as sensitive.  So hopefully I would not be fully invested in the broad market if it takes a gradual decline and have a little hedged in the oil market if you will. 

The last two times Oil has hit $60.00 a barrel, we have seen it creep up that year to much higher numbers.  We have also seen that when this happens it is often followed by that market correction and in 2008 a little worse than just a correction. 

I am younger and late to the investing game.  I do not want to buy in too things like VTSAX with everything I have for equities at this high of a price.  Sure, some of it is there, but I am taking what I see in my mind as a calculated yet risky investment.  As this forum seems to say all over post, we never know what will happen to the market tomorrow, next week, or next month.  But Oil is going to be needed tomorrow no matter what happens. Me putting a nice stake of my equities investment in Oil is not me doubling down on an ace and an 9 when the dealer is showing a 6. 

JetBlast

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Re: Ways to invest in OIL
« Reply #16 on: January 15, 2018, 09:24:30 AM »
Is there a reason you think you know more than the broader market about crude oil? Without googling, do you understand contango and backwardation? If not, there's a 100% chance that you do not know more than the market, and even if you do, the odds of you knowing something the market doesn't are still prohibitive.

But that's not to say you can't beat the market through some blind luck. And if gambling's your thing might as well go big: OILU from ProShares gives you 3x leveraged long exposure to WTI sweet, light crude futures with a 0.95 ER. Good luck!

I'm not thinking I know more than the market.  Im telling you exactly what I believe and the market is already aware.  Im merely trying to get in early and sell for a profit.  If I can turn 15% profit I'm tickled, if more great!   But I just don't see it going backwards for the year 2018.  Like mentioned, drilling, fracking, service companies, etc are all making in investments and commitments to 2018 being a great year for them.
If you believe the market already knows oil will rise in the short term then it follows that itís already reflected in the price of oil stocks and youíre too late. Iíd also take time to consider why youíre confident oil will rise. Back around 2013 everyone was convinced interest rates would rise in the very short term future. Everyone said rates ďcanít stay this low foreverĒ and ďit would be unprecedented for rates to stay this low.Ē Rates fell a bit more instead, then wobbled around for a few years not really going anywhere, until the Fed finally raised rates around a year ago.

I honestly donít know if the market consensus is similar to your position regarding oil prices. Maybe youíre actually a contrarian. Iíd have to look at analysts forecasts and recent price movements of oil futures and oil company stocks to get a feel for what the market thinks. Nothing wrong with being a contrarian. Itís often a good way to make money in the market.

haggard

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Re: Ways to invest in OIL
« Reply #17 on: January 15, 2018, 09:36:56 AM »
Is there a reason you think you know more than the broader market about crude oil? Without googling, do you understand contango and backwardation? If not, there's a 100% chance that you do not know more than the market, and even if you do, the odds of you knowing something the market doesn't are still prohibitive.

But that's not to say you can't beat the market through some blind luck. And if gambling's your thing might as well go big: OILU from ProShares gives you 3x leveraged long exposure to WTI sweet, light crude futures with a 0.95 ER. Good luck!




I'm not thinking I know more than the market.  Im telling you exactly what I believe and the market is already aware.  Im merely trying to get in early and sell for a profit.  If I can turn 15% profit I'm tickled, if more great!   But I just don't see it going backwards for the year 2018.  Like mentioned, drilling, fracking, service companies, etc are all making in investments and commitments to 2018 being a great year for them.
If you believe the market already knows oil will rise in the short term then it follows that itís already reflected in the price of oil stocks and youíre too late. Iíd also take time to consider why youíre confident oil will rise. Back around 2013 everyone was convinced interest rates would rise in the very short term future. Everyone said rates ďcanít stay this low foreverĒ and ďit would be unprecedented for rates to stay this low.Ē Rates fell a bit more instead, then wobbled around for a few years not really going anywhere, until the Fed finally raised rates around a year ago.

I honestly donít know if the market consensus is similar to your position regarding oil prices. Maybe youíre actually a contrarian. Iíd have to look at analysts forecasts and recent price movements of oil futures and oil company stocks to get a feel for what the market thinks. Nothing wrong with being a contrarian. Itís often a good way to make money in the market.

Not trying to be a contrarian at all, and I may lose at this venture and know that from the beginning.  I just think when all the oil companies drilling and operating in the WTI market start to have good years in 2018 the stock prices will go up.  Many of these companies have been operating with skeleton crews drilling very few holes in the ground. They are all ramping up to drill a lot more in the year 2018. 

haggard

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Re: Ways to invest in OIL
« Reply #18 on: January 15, 2018, 09:41:12 AM »
https://forum.mrmoneymustache.com/investor-alley/prediction-next-recession-starts-late-summer-2018/

Take a look at BACHHI post, we will see more rigs added each month in the US in 2018.  You might also start to see off shore come back if barrel price gets confidently into the $70/ barrel.  But right now it is much cheaper to drill land oil than offshore with the current demands.

boarder42

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Re: Ways to invest in OIL
« Reply #19 on: January 15, 2018, 09:43:16 AM »
im curious how you think the following will impact WTI and Brent prices over the next 6-12 months:

1. Floating storage totals.
2. OPECís commitment to supply cuts.
3. Russiaís production and whether they begin marketing more to China.
4. Will the current administration approve pipelines for heavy Canadian crude? If it does, will refineries retool to switch away from WTI?
5. Will the administration open up more onshore public lands to drilling and speed up approvals for new wells?

There are people who make it their full time job to speculate on oil prices. They spend all day researching anything and everything that could possibly impact prices. Some of them are very smart. Even the smart ones get things wrong and lose money. What is your advantage?

Let me expand a little bit as well now that I'm not on my phone.

Oil always seems to rise as the economy is doing well.  The economy always has a fix after a good rise, this we all know and it will happen at sometime.  If you take a glance at each of these things, Oil tends to ride out that correction and often holds.  By getting "down" correctly on oil I am also hoping to be ok when this thing takes a market correction.  So here is my outlook;

I think oil/serv companies/drilling comp/exploration/etc all will see a nice spike this year in business, revenue, and profit.  If there is a market correction to be had in the near future (year or so) investing in oil seems to not be as sensitive.  So hopefully I would not be fully invested in the broad market if it takes a gradual decline and have a little hedged in the oil market if you will. 

The last two times Oil has hit $60.00 a barrel, we have seen it creep up that year to much higher numbers.  We have also seen that when this happens it is often followed by that market correction and in 2008 a little worse than just a correction. 

I am younger and late to the investing game.  I do not want to buy in too things like VTSAX with everything I have for equities at this high of a price.  Sure, some of it is there, but I am taking what I see in my mind as a calculated yet risky investment.  As this forum seems to say all over post, we never know what will happen to the market tomorrow, next week, or next month.  But Oil is going to be needed tomorrow no matter what happens. Me putting a nice stake of my equities investment in Oil is not me doubling down on an ace and an 9 when the dealer is showing a 6.

nope its far dumber than doubling down on an Ace and a 9 when the dealer is showing a 6 - unless you're doing this with money you can afford to lose - then its in the same ball park- b/c someone here doubling on an Ace and a 9 with a dealer showing a 6 is doing it for entertainment with money they can lose. 

the odds a person can beat the market are slim to none- the top investment firms in the country dont be the market on a regular basis.  to think you personally can do this is arrogance but we all have to learn some how. 

You said you're young but late to the investing game - so rather than learn from all of what the big data says and puts in front of you you'd rather try to beat the market - which is extremely unlikely - you're basing your decisions on emotion and have market timing showing thru -

do what you will but this is a recipe for disaster.  Maybe youre right maybe you're lucky - but its unlikely in the grand scheme of life and investing.

boarder42

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Re: Ways to invest in OIL
« Reply #20 on: January 15, 2018, 09:45:33 AM »
https://forum.mrmoneymustache.com/investor-alley/prediction-next-recession-starts-late-summer-2018/

Take a look at BACHHI post, we will see more rigs added each month in the US in 2018.  You might also start to see off shore come back if barrel price gets confidently into the $70/ barrel.  But right now it is much cheaper to drill land oil than offshore with the current demands.

he's not using that data to change his investment strategy thats the difference. 

i can show you frequent posts from people here who think they are smarter than the market and lose

MrSpendy

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Re: Ways to invest in OIL
« Reply #21 on: January 15, 2018, 09:55:07 AM »
So I've got my interactive brokers account open now. January 2019 light sweet crude on the NYMEX is trading with a bid of $60.64 and an ask of $60.69. To buy 1 contract, my commission would be $2.37. So the bid/ask + commissions is a meager $2.42 on a $60,670 contract.  Mini futures are 1/2 that size I believe.

So there's your super efficient way to speculate in oil.

So what exactly are you buying if you buy that. You're buying 1000 barrels of oil to be delivered with the following specifications:

Quote
Delivery shall be made free-on-board ("F.O.B.") at any pipeline or storage facility in Cushing, Oklahoma with pipeline access to Enterprise, Cushing storage or Enbridge, Cushing storage. Delivery shall be made in accordance with all applicable Federal executive orders and all applicable Federal, State and local laws and regulations.

At buyer's option, delivery shall be made by any of the following methods: (1) by interfacility transfer ("pumpover") into a designated pipeline or storage facility with access to seller's incoming pipeline or storage facility; (2) by in-line (or in-system) transfer, or book-out of title to the buyer; or (3) if the seller agrees to such transfer and if the facility used by the seller allows for such transfer, without physical movement of product, by in-tank transfer of title to the buyer.
http://www.cmegroup.com/trading/energy/crude-oil/light-sweet-crude_contractSpecs_futures.html

In the commodities world there are hedgers (those locking in their price for oil they need) and there are speculators (those wishing to profit from the change in price of the underlying commodity).

I will go out on a limb and say that you are not operating as a refiner of light sweet crude oil or an running a small airline and do not need to purchase oil to be delivered to you in Cushing, Oklahoma. You're not going to be sitting there in Oklahoma watching your black gold pour into  your storage tank. Therefore you are a speculator.

The inherent problem in you doing this (versus purchasing companies in VTSAX or even an energy ETF) is that you are, by definition, making an investment that is solely based upon the short term swing in oil, when your thesis "oil is going to be needed tomorrow no matter what happens" has very little to do with what the price for delivery of 1000 barrels of crude oil to Cushing Oklahoma is 1 year from now (or 3 months or 2 years from now). Natural gas prices in certain geographies have been "needed no matter what happens" to warm people up. That hasn't prevented the price from going negative1 or parabolic2. The fact that people need it doesn't mean the futures aren't wildly volatile based on short term swings in supply / demand or that you have any kind of insight. Now oil is more global and less volatile, but is still prone big swings (as you know).

If you think "oil is going to be needed", then be comforted that 5.5% of VTSAX owns reserves and/or extracts oil. The return on exxon mobil* is not 100% dependent on the price of oil in the next year, but rather the price less the cost of extraction averaged over the next 10, 20, 30 ,50, 100 years, so your price risk isn't concentrated in so short a time period.

If you want a little more than 5.5%, fine, buy an energy ETF; you'd still be making an overweight with little real thesis, but at least your time horizon won't be so short.

If after reading all that, you want to speculate in oil futures, then there are extremely efficient ways to possibly incinerate your capital as illustrated by the low transaction costs of the futures market. Pure exposure to oil is available in 500 barrel increments (the mini CL futures). Less than pure is available via ETFs ant ETN's. Levered exposure is available via options on the futures (so you can buy the right to buy 1000 barrels a year from now). It's all there for you to gamble away.

If I was trying to do what you're doing I'd buy an option to buy 1000 barrels in Jan 2019 for $60.00. That would cost me ~$5 (the options market isn't open so I can't tell) or $5,000 per contract. That way, if you're right you've got levered exposure. If you're wrong, you know precisely what you'll lose. But I'd only do that with an extremely small portion of capital. So if oil's at $60 or below, you lose your $5K and go home crying and blame mrspendy for serving you too many drinks at the table and sending you to the craps table. And it's at $80, you make $15K ($20K less $5K premium) and pat yourself on the back.


1. http://business.financialpost.com/commodities/canadian-natural-gas-prices-enter-negative-territory-amid-pipeline-outages
2. https://www.bloomberg.com/news/articles/2018-01-04/natural-gas-in-u-s-soars-to-world-s-priciest-as-snow-slams-east
*this is highly simplified given XOM has large refining and chemicals operations, but you get my point.
« Last Edit: January 15, 2018, 10:03:42 AM by mrspendy »

haggard

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Re: Ways to invest in OIL
« Reply #22 on: January 15, 2018, 09:57:21 AM »
https://forum.mrmoneymustache.com/investor-alley/prediction-next-recession-starts-late-summer-2018/

Take a look at BACHHI post, we will see more rigs added each month in the US in 2018.  You might also start to see off shore come back if barrel price gets confidently into the $70/ barrel.  But right now it is much cheaper to drill land oil than offshore with the current demands.

he's not using that data to change his investment strategy thats the difference. 

i can show you frequent posts from people here who think they are smarter than the market and lose

Look, I am not sure if you haven't read it or what, but with all due respect and I'll say it again. My approach is not to be smarter than the market nor am I trying.  I am trying to ride the wave in 2018 as oil continues to go up.  I can't help but think your continue post saying the same thing if you aren't political or agenda driven against oil to continue to saying I'm riverboat gambling by wanting to invest in something that is trending up. 

I do not anticipate on beating the market!  I anticipate buying in too oil in the right ways with as much help as I can get.  I hope to sell out of it within the year and make a profit, that is all. 

haggard

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Re: Ways to invest in OIL
« Reply #23 on: January 15, 2018, 10:05:24 AM »
So I've got my interactive brokers account open now. January 2019 light sweet crude on the NYMEX is trading with a bid of $60.64 and an ask of $60.69. To buy 1 contract, my commission would be $2.37. So the bid/ask + commissions is a meager $2.42 on a $60,670 contract.  Mini futures are 1/2 that size I believe.

So there's your super efficient way to speculate in oil.

So what exactly are you buying if you buy that. You're buying 1000 barrels of oil to be delivered with the following specifications:

Quote
Delivery shall be made free-on-board ("F.O.B.") at any pipeline or storage facility in Cushing, Oklahoma with pipeline access to Enterprise, Cushing storage or Enbridge, Cushing storage. Delivery shall be made in accordance with all applicable Federal executive orders and all applicable Federal, State and local laws and regulations.

At buyer's option, delivery shall be made by any of the following methods: (1) by interfacility transfer ("pumpover") into a designated pipeline or storage facility with access to seller's incoming pipeline or storage facility; (2) by in-line (or in-system) transfer, or book-out of title to the buyer; or (3) if the seller agrees to such transfer and if the facility used by the seller allows for such transfer, without physical movement of product, by in-tank transfer of title to the buyer.
http://www.cmegroup.com/trading/energy/crude-oil/light-sweet-crude_contractSpecs_futures.html

In the commodities world there are hedgers (those locking in their price for oil they need) and there are speculators (those wishing to profit from the change in price of the underlying commodity).

I will go out on a limb and say that you are not operating as a refiner of light sweet crude oil or an running a small airline and do not need to purchase oil to be delivered to you in Cushing, Oklahoma. You're not going to be sitting there in Oklahoma watching your black gold pour into  your storage tank. Therefore you are a speculator.

The inherent problem in you doing this (versus purchasing companies in VTSAX or even an energy ETF) is that you are, by definition, making an investment that is solely based upon the short term swing in oil, when your thesis "oil is going to be needed tomorrow no matter what happens" has very little to do with what the price for delivery of 1000 barrels of crude oil to Cushing Oklahoma is 1 year from now (or 3 months or 2 years from now). Natural gas prices in certain geographies have been "needed no matter what happens" to warm people up. That hasn't prevented the price from going negative1 or parabolic2. The fact that people need it doesn't mean the futures aren't wildly volatile based on short term swings in supply / demand or that you have any kind of insight. Now oil is more global and less volatile, but is still prone big swings (as you know).

If you think "oil is going to be needed", then be comforted that 5.5% of VTSAX owns reserves and/or extracts oil. The return on exxon mobil* is not 100% dependent on the price of oil in the next year, but rather the price less the cost of extraction averaged over the next 10, 20, 30 ,50, 100 years, so your price risk isn't concentrated in so short a time period.

If you want a little more than 5.5%, fine, buy an energy ETF; you'd still be making an overweight with little real thesis, but at least your time horizon won't be so short.

If after reading all that, you want to speculate in oil futures, then there are extremely efficient ways to possibly incinerate your capital as illustrated by the low transaction costs of the futures market. Pure exposure to oil is available in 500 barrel increments (the mini CL futures). Less than pure is available via ETFs ant ETN's. Levered exposure is available via options on the futures (so you can buy the right to buy 1000 barrels a year from now). It's all there for you to gamble away.


1. http://business.financialpost.com/commodities/canadian-natural-gas-prices-enter-negative-territory-amid-pipeline-outages
2. https://www.bloomberg.com/news/articles/2018-01-04/natural-gas-in-u-s-soars-to-world-s-priciest-as-snow-slams-east
*this is highly simplified given XOM has large refining and chemicals operations, but you get my point.

Thank you for your time here!  I am not looking at buying Oil directly, my goal is buy into ETF's/companies that are going to see a rise in stock price as oil drilling for WTI increases this year.  I apologize if I've said differently.  Currently I am holding a nice small portion of USL.  I am now looking at OILU and OILK from a previous poster, but I am having to learn about proshares and their 3x stuff as this is all new to me.  Luckily I have a slow day ahead of me and the market is closed. 

I also in all of my notes found a couple of energy ETF's I really like that had Exxon, chevron, schlumb, Halliburton, etc.  I was about to pull the trigger and put 5-10% of this allotted budget the other day but that morning was the morning the news broke of NYC going to sue them so I tampered back off and started reading more, then found this board and started asking questions. 

I would really like some ETF's that are going to rise assuming the drilling of WTI continues to increase.  I know that if WTI oil is cut off tomorrow I will lose, however I don't think that will happen just like I don't think Apple or Microsoft will  be withheld from being traded tomorrow. 

boarder42

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Re: Ways to invest in OIL
« Reply #24 on: January 15, 2018, 10:27:16 AM »
https://forum.mrmoneymustache.com/investor-alley/prediction-next-recession-starts-late-summer-2018/

Take a look at BACHHI post, we will see more rigs added each month in the US in 2018.  You might also start to see off shore come back if barrel price gets confidently into the $70/ barrel.  But right now it is much cheaper to drill land oil than offshore with the current demands.

he's not using that data to change his investment strategy thats the difference. 

i can show you frequent posts from people here who think they are smarter than the market and lose

Look, I am not sure if you haven't read it or what, but with all due respect and I'll say it again. My approach is not to be smarter than the market nor am I trying.  I am trying to ride the wave in 2018 as oil continues to go up.  I can't help but think your continue post saying the same thing if you aren't political or agenda driven against oil to continue to saying I'm riverboat gambling by wanting to invest in something that is trending up. 

I do not anticipate on beating the market!  I anticipate buying in too oil in the right ways with as much help as I can get.  I hope to sell out of it within the year and make a profit, that is all.

what value does this get you then if it doesnt be the market - you now have short term capital gains to pay at whatever your marginal rate is on top of not beating the market.

this statement is nonsensical in so many ways -

If you're not planning to beat the market why do it at all and why incur the larger tax burden.

i mean seriously Why the fuck would you do this at all if you dont plan to beat the market.

note i dont care if you're talking about bitcoin, oil, or candy covered unicorn shit - i have no political ties to any of these things - but the only reason you'd buy any one market sector esp. a commodity is if you think you will outperform the market - which is a bad reason to buy it.
« Last Edit: January 15, 2018, 10:32:03 AM by boarder42 »

ChpBstrd

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Re: Ways to invest in OIL
« Reply #25 on: January 15, 2018, 12:53:35 PM »
I agree that you should not concentrate your portfolio in oil. That said, you're a grown adult, I presume, so here's how to take that specific, concentrated risk.

USO is a (the most popular?) fund that uses futures to track the oil market.

USO also has an options market that currently goes out to January 17,2020. So you could make a highly leveraged bet such as buying calls if you really wanted. A more conservative idea would be to attempt generating income using 30 day bull put spreads or bull call spreads. If USO's 25% implied volatility isn't high enough, RIG might be a good at about 45%!

There's the rope, now hang yourself if you must. But prior to clicking "buy", please read this cautionary tale about another sector-picker and assure yourself there's no resemblance:
 
https://forum.mrmoneymustache.com/investor-alley/how-to-deal-with-losing-$117k-in-stock-market/

Good luck!

haggard

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Re: Ways to invest in OIL
« Reply #26 on: January 15, 2018, 01:09:45 PM »
I agree that you should not concentrate your portfolio in oil. That said, you're a grown adult, I presume, so here's how to take that specific, concentrated risk.

USO is a (the most popular?) fund that uses futures to track the oil market.

USO also has an options market that currently goes out to January 17,2020. So you could make a highly leveraged bet such as buying calls if you really wanted. A more conservative idea would be to attempt generating income using 30 day bull put spreads or bull call spreads. If USO's 25% implied volatility isn't high enough, RIG might be a good at about 45%!

There's the rope, now hang yourself if you must. But prior to clicking "buy", please read this cautionary tale about another sector-picker and assure yourself there's no resemblance:
 
https://forum.mrmoneymustache.com/investor-alley/how-to-deal-with-losing-$117k-in-stock-market/

Good luck!

USO was what a lot of my early research came back too.  But then I learned that USL had outperformed USO for like 3 years pro to this year.  So I started out and bought about 15% of this allotted money in USL. 

As far as the bull put calls and puts, I have no idea about any of that, it is a different language to me. I will have to read up on that, however I want nothing to do with offshore drilling at this very moment.  I want to be mainly invested in (with these allotted funds) on shore WTI with a little of Brent involved, in a perfect world. 

Offshore oil needs the price of oil to still rise probably another 25% before they will really fire it up.  This could very well happen and if I play these cards right I will be hoping that happens.  But I have to learn how to get this small investment in place first.  So for now I'll stay away from RIG and other options like that. 

haggard

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Re: Ways to invest in OIL
« Reply #27 on: January 15, 2018, 01:29:54 PM »
I agree that you should not concentrate your portfolio in oil. That said, you're a grown adult, I presume, so here's how to take that specific, concentrated risk.

USO is a (the most popular?) fund that uses futures to track the oil market.

USO also has an options market that currently goes out to January 17,2020. So you could make a highly leveraged bet such as buying calls if you really wanted. A more conservative idea would be to attempt generating income using 30 day bull put spreads or bull call spreads. If USO's 25% implied volatility isn't high enough, RIG might be a good at about 45%!

There's the rope, now hang yourself if you must. But prior to clicking "buy", please read this cautionary tale about another sector-picker and assure yourself there's no resemblance:
 
https://forum.mrmoneymustache.com/investor-alley/how-to-deal-with-losing-$117k-in-stock-market/

Good luck!

thanks for that link.  Feel sorry for that guy!  He selected a few stocks and hammered them hard and lost.  I am familiar with the seventy seven energy and sand ridge down fall (sand ridge screwed over a lot of people) and I think there is even a good conspiracy theory behind one of these collapses.  That being said, I want to differentiate myself from that theory in the fact so far all of my studies have been in funds/etf's so hopefully if another company goes belly up it won't wipe everything out.  I am in essence betting on oil going up just like an index fund is betting on the stock market going up.  However, USO and USL aren't filing chapter 11 and am guessing OILU is the same way, however I don't understand the 3x thing yet. 

acroy

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Re: Ways to invest in OIL
« Reply #28 on: January 15, 2018, 01:48:28 PM »
I bought some VDE a couple years back when oil was under $40. It's tough for it to go much under that. When you can buy the resource cheaper than you can produce it, it is classically under-valued. Rode it up and sold it actually just last week; it was 'only' like a 35% gain over 2yrs iirc

Now I have some URA (uranium baby!) again because it seems to be under-valued.

But the whole time, I know I should just chuck it all into VTI and walk away and quit wasting time and do something good for the world ;)

haggard

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Re: Ways to invest in OIL
« Reply #29 on: January 15, 2018, 02:11:02 PM »
I bought some VDE a couple years back when oil was under $40. It's tough for it to go much under that. When you can buy the resource cheaper than you can produce it, it is classically under-valued. Rode it up and sold it actually just last week; it was 'only' like a 35% gain over 2yrs iirc

Now I have some URA (uranium baby!) again because it seems to be under-valued.

But the whole time, I know I should just chuck it all into VTI and walk away and quit wasting time and do something good for the world ;)


I recently purchased a nice sum of DIA over VTI for my longer term investment allocation.

gaja

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Re: Ways to invest in OIL
« Reply #30 on: January 15, 2018, 02:13:19 PM »
You should be able to pick up some oil stocks on sale, since NYC isnít the only large fund that has decided to divest from oil and gas. The Norwegian pension fund has also decided to get out of all oil and gas (divested from coal a few years ago). Roughly calculated, we are selling stocks worth somewhere around $600 million to $1 billion. The question is; when some of the largest long term holders, like pension funds, decide to sell and stay away; will the stock price bounce back as readily as before?

Norway not only gets income from taxing oil producers in our area, we also have a large supply industry, and ship builders who have targeted this market. A lot of the supply ships are currently without jobs, and some shipowners, amongst them old and supposedly rock solid companies, are bankrupt. The shipbuilders are focusing on different markets; offshore wind, car ferries, and private yachts. If oil gets good enough prices that offshore drilling is back on, there are a lot of currently empty rigs and vessels ready to be deployed. 

On longer term, there are gigantic projects in Europe and China on not only changing from fossil fueled to electric/bio energy vehicles (road, water, rails,air), but also getting rid of oil for heating and industry. Oil as a heating source will be banned both for residential and industrial buildings by 2020 in Norway, and this will probably spread to other parts of Europe. China recently electrified the entire bus fleet of one of its largest cities: https://www.google.no/amp/s/www.engadget.com/amp/2017/12/29/china-shenzhen-public-electric-buses/

haggard

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Re: Ways to invest in OIL
« Reply #31 on: January 15, 2018, 02:22:55 PM »
You should be able to pick up some oil stocks on sale, since NYC isnít the only large fund that has decided to divest from oil and gas. The Norwegian pension fund has also decided to get out of all oil and gas (divested from coal a few years ago). Roughly calculated, we are selling stocks worth somewhere around $600 million to $1 billion. The question is; when some of the largest long term holders, like pension funds, decide to sell and stay away; will the stock price bounce back as readily as before?

Norway not only gets income from taxing oil producers in our area, we also have a large supply industry, and ship builders who have targeted this market. A lot of the supply ships are currently without jobs, and some shipowners, amongst them old and supposedly rock solid companies, are bankrupt. The shipbuilders are focusing on different markets; offshore wind, car ferries, and private yachts. If oil gets good enough prices that offshore drilling is back on, there are a lot of currently empty rigs and vessels ready to be deployed. 

On longer term, there are gigantic projects in Europe and China on not only changing from fossil fueled to electric/bio energy vehicles (road, water, rails,air), but also getting rid of oil for heating and industry. Oil as a heating source will be banned both for residential and industrial buildings by 2020 in Norway, and this will probably spread to other parts of Europe. China recently electrified the entire bus fleet of one of its largest cities: https://www.google.no/amp/s/www.engadget.com/amp/2017/12/29/china-shenzhen-public-electric-buses/

I am wanting to stay away from offshore oil at the moment.  I am trying to invest in WTI, which is oil drilled in west Texas, Oklahoma, and maybe North Dakota.  This oil is able to be extracted a lot cheaper and piped to the "market" a lot less expensive than offshore.  This is the oil that is very profitable for oil companies when pricing gets above $55-$60 / barrel. Offshore will need another true boom and the pricing to hit $75 or more before it becomes viable for them to start offshore drilling like it was 5+ years ago. 


montgomery212

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Re: Ways to invest in OIL
« Reply #32 on: January 15, 2018, 04:07:48 PM »
Would love to talk to you about this. MMM leans VERY heavily towards index funds (and I invest a lot in those too), but I've always had a fascination with oil -- probably because it's a physical commodity and you can track how much is being produced, demand/supply etc.

So in 2016 -- I bought USL and CXO (exploration & production). I didn't catch the bottom when oil hit $26 that March, but I bought both that summer when WTI was trading around $46-47. I viewed it as a -- buy it and forget it for a while -- oil can't sustainably stay this low forever. After 1.5 yrs of sideways movement, there's been a breakout this year as we're looking at $64 WTI. I think we're now getting to the point/have already gotten to the point where it's profitable for ND and Texas to start drilling again. CXO and Devon Energy are supposed to do well there -- bc as other smaller companies are competing to find frack crews and get operations going, CXO and Devon are diversified companies that have all of those parts ready to go. So I can see myself riding CXO a bit longer. OTOH as for USL, I don't see myself holding that more than a few more weeks. Reality is if/when US operations get going again, supply increases and WTI price is going down. I'm hoping it gets to the upper $60s/low 70s, but barring some huge geopolitical upheaval or some huge problem with US companies getting drilling going again, I don't seem myself holding past that range.

One thing to consider -- I put a small % of my portfolio in oil (prob less than 4%) but I did it with the view of a "diversification" play. My usual goal is to beat the S&P year in and year out (and I have overall), but I did not think about that 4% of my portfolio that a beat was possible. I bought when oil was trading sideways and I recognized that SOOOO many factors affect oil -- the OPEC deal wasn't even on the table when I bought and then suddenly there was a deal in Nov 2016; an extension in March 2017; and now they've said they'll continue to extend thru 2018 (though who knows when cooperation falls apart). And while US isn't involved in OPEC, all of these factors do affect oil prices directionally everywhere. So I say go for it with oil IF you can accept that you may not beat the market. If I were to sell my holdings today, I'd walk away with returns of 12-15% on both USL and CXO. That's fine and certainly more than that money would've earned in cash or a CD -- but obviously there'd be a MUCH higher return if I had put it into the S&P in summer 2016. (And likely THAT is what will prevent me from doing oil again -- now that this is somewhat out of my system.)

haggard

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Re: Ways to invest in OIL
« Reply #33 on: January 15, 2018, 04:48:22 PM »
Would love to talk to you about this. MMM leans VERY heavily towards index funds (and I invest a lot in those too), but I've always had a fascination with oil -- probably because it's a physical commodity and you can track how much is being produced, demand/supply etc.

So in 2016 -- I bought USL and CXO (exploration & production). I didn't catch the bottom when oil hit $26 that March, but I bought both that summer when WTI was trading around $46-47. I viewed it as a -- buy it and forget it for a while -- oil can't sustainably stay this low forever. After 1.5 yrs of sideways movement, there's been a breakout this year as we're looking at $64 WTI. I think we're now getting to the point/have already gotten to the point where it's profitable for ND and Texas to start drilling again. CXO and Devon Energy are supposed to do well there -- bc as other smaller companies are competing to find frack crews and get operations going, CXO and Devon are diversified companies that have all of those parts ready to go. So I can see myself riding CXO a bit longer. OTOH as for USL, I don't see myself holding that more than a few more weeks. Reality is if/when US operations get going again, supply increases and WTI price is going down. I'm hoping it gets to the upper $60s/low 70s, but barring some huge geopolitical upheaval or some huge problem with US companies getting drilling going again, I don't seem myself holding past that range.

One thing to consider -- I put a small % of my portfolio in oil (prob less than 4%) but I did it with the view of a "diversification" play. My usual goal is to beat the S&P year in and year out (and I have overall), but I did not think about that 4% of my portfolio that a beat was possible. I bought when oil was trading sideways and I recognized that SOOOO many factors affect oil -- the OPEC deal wasn't even on the table when I bought and then suddenly there was a deal in Nov 2016; an extension in March 2017; and now they've said they'll continue to extend thru 2018 (though who knows when cooperation falls apart). And while US isn't involved in OPEC, all of these factors do affect oil prices directionally everywhere. So I say go for it with oil IF you can accept that you may not beat the market. If I were to sell my holdings today, I'd walk away with returns of 12-15% on both USL and CXO. That's fine and certainly more than that money would've earned in cash or a CD -- but obviously there'd be a MUCH higher return if I had put it into the S&P in summer 2016. (And likely THAT is what will prevent me from doing oil again -- now that this is somewhat out of my system.)

Montgomery, thank you for your input.  a part of this also plays in my mind when you say you would have had higher returns in the S&P since 2016.  I just don't see the 2016 to current rise to continue from now till 2020.  So I will keep my AA the way I planned and putting most my money there while be risking with the small portfolio trying to pick up a little better gains. 

I feel very comfortable in my assumption that WTI drilling is going to really pickup this year.  It is how to parlay that into investment returns is what I don't exactly know how.  USL may or may not be it, or even the 3x returns of OILU may or may not be it.  However, I think you will see demand for oil to be drilled rise when it comes to WTI.  I am just trying to best research and explore the most profitable or highest return on this either small bubble or potential boom.  I really wish I would have bought in when oil was flirting around $50, but I was too slow.  Now I am buying in when the WTI drilling companies are becoming profitable, bringing into the equation everything you mention of if they open the spicket for WTI does the price go down since the supply is up.  I doubt so for the short term, but by all means the long run you are most likely correct. 

montgomery212

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Re: Ways to invest in OIL
« Reply #34 on: January 15, 2018, 05:44:47 PM »
I think I have a similar theory on investing -- most of my asset allocation is S&P BUT with an additional percentage thrown in in sectors that I think will beat the S&P. That's the only way I've figured out to have a chance to beat the S&P. I think you are right that energy will be an outperformer this year. IDK if that is in barrels of oil directly -- as we've both pointed out for supply/demand reasons. If I were you, I'd be looking at the larger US drillers (CXO; Devon) bc they'll be in demand as well as oilfield servicers (that provide all the trucks, concrete, equipment, transportation) that's needed for drilled operations -- SLB comes to mind. Good luck to you -- would be great if you kept me posted on your thoughts on oil. Rare to have people here who are also learning that sector as I am.

My other sector of choice for this year is financials -- interest rates are going to go up and (hopefully) banks benefit by making commercial loans at higher rates and charging higher rates on existing revolving loans. But given where I work, I'm not allowed to stock pick in that sector at all -- so XLF it is for me.

haggard

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Re: Ways to invest in OIL
« Reply #35 on: January 15, 2018, 06:13:06 PM »
I think I have a similar theory on investing -- most of my asset allocation is S&P BUT with an additional percentage thrown in in sectors that I think will beat the S&P. That's the only way I've figured out to have a chance to beat the S&P. I think you are right that energy will be an outperformer this year. IDK if that is in barrels of oil directly -- as we've both pointed out for supply/demand reasons. If I were you, I'd be looking at the larger US drillers (CXO; Devon) bc they'll be in demand as well as oilfield servicers (that provide all the trucks, concrete, equipment, transportation) that's needed for drilled operations -- SLB comes to mind. Good luck to you -- would be great if you kept me posted on your thoughts on oil. Rare to have people here who are also learning that sector as I am.

My other sector of choice for this year is financials -- interest rates are going to go up and (hopefully) banks benefit by making commercial loans at higher rates and charging higher rates on existing revolving loans. But given where I work, I'm not allowed to stock pick in that sector at all -- so XLF it is for me.

Thanks Montgomery.  I don't mind at all maintaining an open dialogue on this "venture".  As I am sure some here would enjoy my agony if it doesn't work and use it for learning later.  But I hope that doesn't happen.

I'll continue to take any help that comes along in learning this aspect and how to correlate it to a sector I think will be profitable for the next year or hopefully longer. 

May I ask why you can't stock pick in the financial institute? 

Rockies

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Re: Ways to invest in OIL
« Reply #36 on: January 16, 2018, 09:22:15 PM »
Haggard, with all due respect I don't think you understand the nature of this forum or the general message of Mr. Money Mustache. The reason you are getting so much resistance is that most people's investment strategy on this site is:

1. Buy index funds slowly and steadily with each paycheck you receive and hold for a very long time.
2. Never stock pick or try to guess the future, because the odds are you will loose money in the long run.
3. If you have a large sum of money to invest the odds are that right now is the best time to invest it instead of waiting, no matter where you think the market is.

You simply are on the wrong forum for this type of question because you are completely going against the fundamental basis of most peoples investment philosophy. I'll answer for all of them by saying you'd be better off plunking down all you money right now in an index fund, and if you arn't comfortable throw 20-40% bonds in there and walk away, ESPECIALLY if you are a new investor.

haggard

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Re: Ways to invest in OIL
« Reply #37 on: January 17, 2018, 09:49:21 AM »
Haggard, with all due respect I don't think you understand the nature of this forum or the general message of Mr. Money Mustache. The reason you are getting so much resistance is that most people's investment strategy on this site is:

1. Buy index funds slowly and steadily with each paycheck you receive and hold for a very long time.
2. Never stock pick or try to guess the future, because the odds are you will loose money in the long run.
3. If you have a large sum of money to invest the odds are that right now is the best time to invest it instead of waiting, no matter where you think the market is.

You simply are on the wrong forum for this type of question because you are completely going against the fundamental basis of most peoples investment philosophy. I'll answer for all of them by saying you'd be better off plunking down all you money right now in an index fund, and if you arn't comfortable throw 20-40% bonds in there and walk away, ESPECIALLY if you are a new investor.


Thanks Rockies.  As I start to learn this stuff on my own I am learning that of this place and one other I started reading at the same time as this.  It was not my intent to offend anyone by my approach nor am I looking to gamble per say. 

I am slowly starting to take ahold of my investments/retirements on my own so may also start a thread on favorite index funds of the frequent guys around here as I have a lot on my watch list at the moment researching.  It seems every time I start to research one I find 2-4 new ones.  So the possibilities keep growing. 

Without completely changing the thread intentions I will ask you a question regarding your last comment.  20-40% in bonds right now seems risky because what I am reading is bonds might not be stable at the moment?  And why the capitalized stressed ESPECIALLY if you are new investor, are you saying that to imply putting that much towards bonds or index funds?

Thanks for your response!  And no respect lost on this end.

haggard

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Re: Ways to invest in OIL
« Reply #38 on: January 17, 2018, 11:11:50 AM »
Haggard, with

For you, I would suggest just picking  a stock/bond asset allocation like 60/40 or 75/25 or 85/15 based on your volatility tolerance.  Take a quiz online, Vanguard has one you can use: https://personal.vanguard.com/us/FundsInvQuestionnaire . Then align everything with it using index funds.  This will get you set up with a good foundation portfolio.  Then you can take your time educating yourself about all the different ways to invest in this, or invest in that, and when bonds outperform or underperform, and how to read the business cycle, etc.  You can place some hypothetical trades in a notebook, or spreadsheet, or whatever.  Or hell, even take 5K as play money, and see how you do with your different strategies.  After a year, if you are not beating your foundation portfolio, then you can just give up and allow the passive index fund portfolio to do it's magic.

That is exactly what I am doing with this ways to invest in Oil.  it is a small portion of my portfolio, that I don't anticipate investing long term with.  This is not my lump sum or my entire portfolio I am trying to roll in to investing in oil. 

jjcamembert

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Re: Ways to invest in OIL
« Reply #39 on: January 17, 2018, 02:06:50 PM »
Some tickers that haven't been mentioned:

XLE: Energy Sector ETF, holds all of the big energy companies (XOM, SLB, CVX) so gets you exposure to a variety of energy products.

XOP: Oil & Gas Exploration ETF: these are the companies that "produce" oil and gas, similar to gold miners

Those are my go-to's. USO isn't a great product for long-term holding because it suffers from contango drag. 

Otherwise as others have mentioned you could trade futures, but they are BIG!

haggard

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Re: Ways to invest in OIL
« Reply #40 on: January 17, 2018, 03:37:26 PM »
Some tickers that haven't been mentioned:

XLE: Energy Sector ETF, holds all of the big energy companies (XOM, SLB, CVX) so gets you exposure to a variety of energy products.

XOP: Oil & Gas Exploration ETF: these are the companies that "produce" oil and gas, similar to gold miners

Those are my go-to's. USO isn't a great product for long-term holding because it suffers from contango drag. 

Otherwise as others have mentioned you could trade futures, but they are BIG!

Thanks!  Yeah I have stayed from USO because USL has outperformed it, and I do have a 4% (of this small fund) in USL right now.  I have 8% is OILU, but I believe it also tied to contango. 

I am trying to read more about the midstream companies right now as I am scared I am too late to the game on oil.  I would have loved to get in while it was in the mid to low 50's.  As I fully believe there will be new holes punched int he ground this year for WTI, it does not appear this is any kind of secret with the news of hitting a record with how many barrels a day are being processed. 

aspiringnomad

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Re: Ways to invest in OIL
« Reply #41 on: January 17, 2018, 05:33:25 PM »

Yeah I have stayed from USO because USL has outperformed it,

The two are probably closely correlated enough that it doesn't matter, but chasing performance is usually a loser's game within the loser's game of stock picking.

Not criticizing, just trying to help out a bit because you said you're new to all this.

haggard

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Re: Ways to invest in OIL
« Reply #42 on: January 17, 2018, 06:39:51 PM »

Yeah I have stayed from USO because USL has outperformed it,

The two are probably closely correlated enough that it doesn't matter, but chasing performance is usually a loser's game within the loser's game of stock picking.

Not criticizing, just trying to help out a bit because you said you're new to all this.

I don't have those stocks research in front of me, but when I put them side x side, it was out performing USO year over year for multiple years.  I feel like that is something to look at, no?

Rob_bob

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Re: Ways to invest in OIL
« Reply #43 on: January 17, 2018, 07:54:00 PM »
Some tickers that haven't been mentioned:

XLE: Energy Sector ETF, holds all of the big energy companies (XOM, SLB, CVX) so gets you exposure to a variety of energy products.

XOP: Oil & Gas Exploration ETF: these are the companies that "produce" oil and gas, similar to gold miners

Those are my go-to's. USO isn't a great product for long-term holding because it suffers from contango drag. 

Otherwise as others have mentioned you could trade futures, but they are BIG!

Thanks!  Yeah I have stayed from USO because USL has outperformed it, and I do have a 4% (of this small fund) in USL right now.  I have 8% is OILU, but I believe it also tied to contango. 

I am trying to read more about the midstream companies right now as I am scared I am too late to the game on oil.  I would have loved to get in while it was in the mid to low 50's.  As I fully believe there will be new holes punched int he ground this year for WTI, it does not appear this is any kind of secret with the news of hitting a record with how many barrels a day are being processed.

Midstream Master Limited Partnerships, MLP, the companies that store and transport oil and natural gas, don't always move in step with oil prices and currently the sector has been beat down the last few years.  Some people think the sector is due for some gains the next year or two.  AMLP is the index ETF for the sector.

montgomery212

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Re: Ways to invest in OIL
« Reply #44 on: January 17, 2018, 08:00:45 PM »

Yeah I have stayed from USO because USL has outperformed it,

The two are probably closely correlated enough that it doesn't matter, but chasing performance is usually a loser's game within the loser's game of stock picking.

Not criticizing, just trying to help out a bit because you said you're new to all this.

I don't have those stocks research in front of me, but when I put them side x side, it was out performing USO year over year for multiple years.  I feel like that is something to look at, no?

Offhand -- USL has outperformed USO in recent years bc USO trades based on the spot price of oil now. In contrast, USL trades based on the AVERAGE price of oil at projected over the next 12 months via futures. So USO is only looking at futures for this/next months while USL is looking at futures with maturities in the next 12 months. USL has done better over the last few years bc we've been in a long period of declining prices -- USL bc it is averaging 12 different maturities is hit less by contango which is an issue when you're in periods where prices are projected to decline. So contango has harmed USL less in a declining price environment. If the theory holds true (and prices keep rising), I expect USO returns to catch up.

boarder42

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Re: Ways to invest in OIL
« Reply #45 on: January 17, 2018, 08:24:42 PM »
I expect Teddy bears to catch up. As long as Teddy is benevolent again.

I also expect beanie babies to beat the market.

I know I know you're not trying to beat the market. Your just trying to..,.....  I'm not sure what you're trying to do. On one hand I can tie the market on the other hand I'm trying to beat. Nope that's not it. I'm not sure what I'm attempting here.

Runge

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Re: Ways to invest in OIL
« Reply #46 on: January 17, 2018, 08:27:04 PM »
If you're really bullish on oil, have you thought about getting a job at an oil and gas company? Directional Drillers and MWD operators make REALLY good money, but it's a hard job. There's also plenty of engineering, IT, management, manufacturing, quality control, trading, well planning, GIS, administrative, transportation logistics, accounting, and many many more other professions.

montgomery212

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Re: Ways to invest in OIL
« Reply #47 on: January 17, 2018, 08:44:32 PM »
If you're really bullish on oil, have you thought about getting a job at an oil and gas company? Directional Drillers and MWD operators make REALLY good money, but it's a hard job. There's also plenty of engineering, IT, management, manufacturing, quality control, trading, well planning, GIS, administrative, transportation logistics, accounting, and many many more other professions.

I only wish - seriously. Not too many females in drilling though. I'm a lawyer but an east coast one so my experience isn't oil & gas and I can't just pick up and leave the east coast . . . . I've always said if I was from Tx/Ok, I would've been an O&G lawyer.

haggard

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Re: Ways to invest in OIL
« Reply #48 on: January 17, 2018, 08:59:42 PM »
I expect Teddy bears to catch up. As long as Teddy is benevolent again.

I also expect beanie babies to beat the market.

I know I know you're not trying to beat the market. Your just trying to..,.....  I'm not sure what you're trying to do. On one hand I can tie the market on the other hand I'm trying to beat. Nope that's not it. I'm not sure what I'm attempting here.

Look, I'm here to learn and expand what little knowledge I have on this stuff.  You don't like this idea for a small amount of my investment funds then so be it.  Is there something about this idea that attracts you so much that makes you keep checking on this thread?  What about this that you hate so bad requires you to continue to chime in with zero input?

I would completely understand your vitriol if I was asking for general help and kept defaulting back to timing the market, trying to beat the market, gambling, etc with my entire portfolio.  But someone discussing taking a risk with a small percentage and your responses are just a little immature.  I'm not here to pick battles, and might actually enjoy your help in other areas, but your post on this subject are beyond old and provide no substance to this discussion. 

haggard

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Re: Ways to invest in OIL
« Reply #49 on: January 17, 2018, 09:03:31 PM »
If you're really bullish on oil, have you thought about getting a job at an oil and gas company? Directional Drillers and MWD operators make REALLY good money, but it's a hard job. There's also plenty of engineering, IT, management, manufacturing, quality control, trading, well planning, GIS, administrative, transportation logistics, accounting, and many many more other professions.

Absolutely there is.  Who says I don't like what I already do?  There is a major difference in wanting to invest a little bit into the oilfield than wanting to pursue a job that is 100% dependent on it.  To expand on your job listings though, many careers and fields don't depend on the oil field but have access to it or can supply goods and services to it that don't demand on it on a day to day basis.