You’re someone who is always on the lookout for new ways to make money through investing. Instead of putting your hard-earned cash into a low-yield savings account or bonds, you want to place it where it will grow and flourish over time. One of the ways to do that is to invest in the energy industry, and specifically, crude oil.
Crude oil investing is one of the best ways to get in on the energy industry and contribute to the global economy. After all, oil prices keep going up, and demand isn’t slowing down anytime soon. For the past five decades, for instance, the demand for oil has gone up 1.3 million barrels per day every single year. By the year 2025, the demand for oil is expected to increase to 3.2 million gallons of liquid fuel oils per minute.
Even with the emergence of alternative energy, the price of oil has jumped due to rising needs from developing and industrialized countries like the U.S. If you’re interested, you can follow this rise by checking out current oil price information and on OilPrice.com. Keeping up with the market price of oil is especially important if you’re going to engage in crude oil investing.
If you are ready to learn to invest in crude oil, then take these five ideas into consideration.
1. Invest in Crude Oil Futures Contracts
Crude oil futures contracts are a great way to start crude oil investing. Crude oil futures contracts are exchange-traded contracts where oil buyers and sellers agree to deliver certain amounts of crude oil on a future date. When futures prices fluctuate, investors make money. If the price of oil goes up in the future, you make money, and if it goes down, you lose money. It’s simple. A big advantage is you can get in on crude oil investing without even having to own a barrel of physical crude oil. When you’re investing in crude oil futures, you’ll need to have 5% of a total contract’s value in your futures brokerage account, so keep that in mind. This can be done on the Nasdaq, NYSE, and New York Mercantile Exchange as the crude oil market and oil industry are represented on each.
2. Invest in Energy Companies that Deal with Crude Oil
When you’re just learning how to invest in crude oil, you’re typically not going to have the expertise and funds that a seasoned crude oil investing pro would have. This means that you cannot invest in smaller oil companies looking for investors, because you don’t have the experience to know whether or not you’re actually making a good investment. You’ve heard that getting in on the ground floor of a new crude oil company is a great way to make the big bucks, but that causes many beginning investors to make mistakes and then lose all their money.
Instead, since you’re just starting out with crude oil investing, stick with reliable energy companies and leading oil producers that have proven market capitalization and returns. If you go with these, you won’t be as affected when crude oil prices go down, and you know you’ll have a solid return on your investment. Some good companies to look into are Exxon Mobil (NYSE:XOM), which made $20.8 billion in 2018, and Royal Dutch Shell (NYSE:RDS.B), which made $21.4 billion in 2018. Their stocks are around $80 per share and $64 per share, respectively.
3. Invest in Energy ETFs
Investing in energy ETFs, or exchange-traded funds is another way to get involved in crude oil investing. An ETF is a hybrid equity instrument that centers on companies that work with oil, alternative energy, and natural gas. With ETFs, you can invest in a number of different sectors in the energy industry. For example, the VanEck Vectors Coal ETF allows you to invest in the coal industry, and the SPDR S&P Oil & Gas Exploration & Production ETF can give you access to upstream oil and gas exploration businesses. Look into various ETFs and what they offer before deciding which one is right for your portfolio. Some are riskier than others, which can be a downside if you’re a conservative investor. Make sure you follow your investing style before figuring out which company you’ll be putting your money on. You’ll discover that energy ETFs offer tax advantages, as well as lower fees than mutual funds.
4. Buy and Store Crude Oil
You can also get into crude oil investing by buying and selling barrels of crude oil itself. While you may profit big by doing this, it is highly risky. You will lose money when the current oil price goes down, for starters. You also have to have the space to store the crude oil, and you have to find buyers for it. Unless you’ve been in the energy business before and you have the capacity to buy and trade crude oil directly, avoid going this route for now.
5. Follow Energy Advantage Investor
If you are seriously interested in getting involved with crude oil investing, then it’s time to subscribe to Energy Advantage Investor, a newsletter that will provide you with energy news and investment advice. Dr. Kent Moors, who has worked in the global energy sector for 30 years, is a trusted expert and advisor in this field. Now, he’s bringing his insights and wisdom on crude oil investing to thousands of subscribers around the world. He’s showing them how they can make money through the exciting energy industry and set themselves up for financial success.
Are you ready to be part of his Energy Inner Circle? If so, subscribe today, and start reaping the benefits immediately.