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Oil Investment

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Futures were the original method for obtaining exposure to commodities. These contracts can be difficult to understand and require a rather complex futures account, so they are not meant for the average investor. For those who fully understand the nuances of these contracts, futures can be one of the most powerful trading tools for an investor, as they offer exposure that, in some cases, can be found nowhere else in the market. 

1. Light Sweet Crude Oil (CL):These futures track WTI crude and are quoted in U.S. dollars and cents per barrel. Each contract represents 1,000 barrels, are optionable, and currently extend exposure to 2020. 

2. Brent Crude (BZ):While not nearly as popular as the WTI futures, Brent offers a different kind of exposure to crude. These contracts, which are also optionable, represent 1,000 barrels and also extend futures to 2020. 

3. E-mini Crude Oil (QM):These futures, which offer exposure to WTI crude, represent 500 barrels per contract. This allows for smaller investors to still make a play on crude without having to shell out the hefty assets required for CL contracts. 

4. Crude Oil Volatility Index (CVF):These VIX-based contracts will offer exposure to the volatility exhibited in crude oil prices. The contracts are a bit tricky and should only be used by those who can confidently invest, but they can be a powerful tool for making a play on crude’s high volatility. 

5. RBOB Gasoline (RB):Rather than investing in unrefined crude oil, these contract specifically invest in RBOB gasoline, which is simply the gas you get at the pump. Some consider these contracts a better play on the consumer sector, as crude and gasoline prices do not always align.
 

 

Crude oil has been in the limelight in recent weeks, as its priced surged from a low of $75 barrel to break through the century mark, marking an increase of over 35%. While oil has long been, arguably, the most popular commodity on the market, investors and traders alike are looking to hop in on the action as crude presents itself with a wealth of opportunities. Though most people simply think of gasoline when they hear the term crude oil, this fossil fuel is actually a vital part of our everyday lives. Crude oil is utilized in everything from the production of plastics and fertilizers, to cosmetics and industrial solvents. 

In an effort to educate investors of all kinds one the various ways to invest in crude oil, we outline options to add exposure to your portfolio. Investments will span from those that are only meant for active traders, to those that can be held in a retirement portfolio, all of which make a play on this vital energy source. 
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