There are many oil exchange traded funds (ETFs) on the U.S., Canadian, and London stock exchanges. The oil ETF represents an alternative to purchasing oil stock or futures contracts. Many of these ETFs invest in baskets of highly rated oil stocks or track crude oil prices. This lowers their inherent external risk while allowing investors to be exposed to the price of oil.
One of the top 100 U.S. ETFs as ranked by some ETF analysts is the United States Oil Fund. This fund has an investment objective for percentage changes in net asset value to reflect the percentage changes in the spot price of West Texas Intermediate light, sweet crude oil that is delivered to Cushing, Oklahoma. This fund currently trades at a price of $33.78 per share.
A Canadian-listed ETF that aims to provide results of twice the daily performance of the NYMEX crude oil price is the Horizons BetaPro NYMEX Crude Oil Bull Plus ETF. This stock price of this fund, currently at $6.49, has taken a fall since early May 2010. Investors should do some further research into this fund to assess the timeframe within which it is expected to rebound.
Even in light of pending industry regulations and Europe’s economic uncertainty, the price of crude oil is relatively stable. Traders perceive a strong tie between the demand for oil and the strength of worldwide recovery. A recent report released by the International Energy Agency increased the estimated global demand for oil for the remainder of this year.
This report caused oil prices to rise, resulting in a recent increase in some of the ETFs contained within the Oil & Gas ETFdb Category. In addition to the United States Oil Fund mentioned above, investors should look into PowerShares DB Energy Fund and United States Brent Oil Fund. However, they should first review the futures curves because these reveal that if spot prices are on the rise, oil ETFs will not be yielding a large payout.
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