When Should You Invest in Oil?


Quick Answer

Invest in oil when the price has reached its lowest point, as noted by U.S. News and World Report. Supply and demand are two determinants that impact the price of oil, which is generally measured in barrels.

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When Should You Invest in Oil?
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Full Answer

To determine if the price of oil is at its lowest, monitor the performance of oil-related securities, as noted by the official NASDAQ website. Popular companies within the oil industry include Whiting Petroleum, Linn Energy, Denbury Resources and Patterson-UTI Energy. Monitor the stock charts for these companies, and choose the type of order to place when investing. Order types include limit orders, stop orders and market orders, as listed by Charles Schwab. Each of these order types dictates the price one is willing to pay per share to minimize losses when selling.

More suppliers and producers of oil cause the price to drop, as noted by U.S. News and World Report. To take advantage of low oil prices, invest in an exchange-traded fund, as listed by About.com. These funds are comprised of various oil stocks and are a simple investment without purchasing any actual oil. In addition, the exchange-traded funds consist of futures and derivative contracts, which factor in prospective prices and expert speculation of the commodity.

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