How Do I Invest in Crude Oil?


Quick Answer

The easiest way for the non-professional investor to invest in crude oil is through the purchase of an exchange-traded fund that tracks the price of the commodity. One share of the U.S. Oil Fund (USO) ETF provides exposure equal to approximately one barrel of oil, according to Investopedia.

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How Do I Invest in Crude Oil?
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Full Answer

ETFs trade on a stock exchange, and much like stocks, are available to be bought and sold intraday. Investopedia points out two more ETFs that track the price of crude oil: the Barclays Bank Plc iPath Exchange (OIL) and PowerShares DB Oil Fund (DBO). For an investor seeking a slightly more diversified energy investment, PowerShares DB Energy Fund (DBE) offers exposure to light sweet crude, heating oil, brent crude, gasoline and natural gas. It's also possible to gain indirect exposure to oil through an investment in the stocks of companies in the energy sector. This can be accomplished with an ETF such as the iShares Global Energy Sector Index Fund (IXC), or a mutual fund like T. Rowe Price New Era Fund (PRNEX).

Investors can also make money when the price of oil declines. For this type of exposure, Investopedia notes ProShares Short Oil & Gas ETF (DDG), which trades inverse to the Dow Jones U.S. Oil & Gas Index.

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