Showing posts with label oil and gas. Show all posts
Showing posts with label oil and gas. Show all posts

Friday 10 April 2020

Trump says ready to help end Saudi-Russian oil-price war


Publish date: Wed, 1 Apr 2020,


Washington: US President Donald Trump said Tuesday he was ready to help resolve an escalating oil price war between Russia and Saudi Arabia that has helped push crude benchmarks to 17-year lows.

The threat of a global recession triggered by the coronavirus pandemic had already hammered prices when Riyadh said last month it would raise exports after a production-cut agreement among top producers flopped in early March.

On Monday, Saudi Arabia said it would increase exports further to a record 10.6 million barrels per day from May, deepening a global supply glut as crude recorded its biggest monthly and quarterly price plunges in history.

Trump said he had spoken with his Russian counterpart Vladimir Putin and Saudi Crown Prince Mohammed Bin Salman by phone with the aim of halting the slide.

"The two countries are discussing it. And I am joining at the appropriate time, if need be," Trump said.

Saudi Arabia had been exporting around 7.0 million barrels per day under an output reduction agreement among a 24-member producer alliance known as OPEC+, which included Russia.

OPEC+ failed to reach an agreement on further production cuts to shore up sagging prices as the coronavirus battered the global economy last month.

Analysts say Riyadh is engaged in a deliberate long-term strategy to capture greater market share by pressuring its high-cost rivals.

"Saudi policy will not just drive more expensive forms of oil production out of the market; it will also make it harder for renewable energy to compete with fossil fuels," said Bernard Haykel, a Saudi expert at Princeton University.

The price war has also hit shale oil producers in the US, with Trump telling Tuesday's press conference that the production dispute threatened "thousands and thousands" of jobs.

In a letter last week to US Secretary of State Mike Pompeo, a group of US senators accused Saudi Arabia and Russia of waging "economic warfare against the United States."



- AFP

Wednesday 18 April 2018

Is an oil refinery a good business to own for the long term?

Is a refinery a good business to own for the long term? 

1. In the oil refining business, the cost of inputs 
(crude oil) and the price of outputs (refined products) are 
both highly volatile, influenced by global, regional, and local 
supply and demand changes. Refineries must find the sweet 
spot against a backdrop of changing environmental regulation, 
changing demand patterns and increased global competition 
among refiners in order to be profitable. 

2. Oil refining is a capital-intensive business.  P
lanning, designing,
permitting and building a new medium-sized refinery is a 5-7 year process,
and costs $7-10 billion, not counting acquiring the land. The cost varies
depending on the location (which determines land and construction costs† ),
the type of crude to be processed and the range of outputs (both of the latter
affect the configuration and complexity of the refinery), the size of the plant
and local environmental regulations.

3. After the refinery is built, it is expensive to operate. Fixed 
costs include personnel, maintenance, insurance, administration 
and depreciation. Variable costs include crude feedstock, 
chemicals and additives, catalysts, maintenance, utilities and 
purchased energy (such as natural gas and electricity). To be 
economically viable, the refinery must keep operating costs 
such as energy, labour and maintenance to a minimum. 

4. Like most other commodity processors (such as food, lumber and 
metals), oil refiners are price takers: in setting their individual 
prices, they adapt to market prices. 

5. Since refineries have little or no influence over the price of 
their input or their output, they must rely on operational 
efficiency for their competitive edge.
Because refining is caught 
between the volatile market segments of cost and price, it is 

exposed to significant risks. 

6. “Crack” Spreads 
The term “crack” comes from how a refinery makes money 
by breaking (or ‘cracking’) the long chain of hydrocarbons 
that make up crude oil into shorter-chain petroleum products. 
The crack spread, therefore, is the difference between 
crude oil prices and wholesale petroleum product prices 
(mostly gasoline and distillate fuels). Like most manufacturers, 
a refinery straddles the raw materials it buys and the finished 
products it sells. In the case of oil refining, both prices 
can fluctuate independently for short periods due to supply, 
demand, transportation and other factors. Such short-term volatility 
puts refiners at considerable risk when the price of one or the 
other rises or falls, narrowing profit margins and squeezing 
the crack spread. The crack spread is a good approximation 
of the margin a refinery earns. Crack spreads are negative if 
the price of refined products falls below that of crude oil. 
A major determinant of a crack spread is the ratio of how 
much crude oil is processed into different refined petroleum 
products, because each type of crude more easily yields a 
different product, and each product has a different value. 
Some crude inherently produces more diesel or gasoline 
due to its composition. 



Summary: 

Refining is “low return, low growth,capital intensive, politically sensitive and environmentally uncertain.” A refinery will close 

if it cannot sustain its profitability.



[The 3 Cs = Capital Intensive, Commodity Pricing and Cyclicality (volatile earnings).]

http://www.canadianfuels.ca/website/media/PDF/Publications/Economics-fundamentals-of-Refining-December-2013-Final-English.pdf

Wednesday 20 July 2016

A Guided Tour of the Market 12

Energy

Although energy can be harvested from myriad sources – coal, nuclear, hydroelectric, wind, solar – nothing can come close to challenging the dominance of oil and gas as a source of energy.

The profitability of the energy sector is highly dependent on commodity prices. Commodity prices are cyclical, as are the sector's profits. It's better to buy when prices are at a cyclical low than when they're high and hitting the headlines.

Keep an eye on reserves and reserve growth because these are the hard assets the company will mine for future revenue.

http://books.danielhofstetter.com/the-five-rules-for-successful-stock-investing/

Friday 31 July 2015

The Oil and Gas sector is prone to intense cyclicality.

Oil and Gas sector

Commodity prices (oil) are cyclical, as are the sector's profits.

The energy sector is prone to intense cyclicality.

Small changes in available supply and market demand tend to have an oversized effect on commodity prices and profits.

However, neither cyclical peaks nor valleys tend to last very long.   It is important to realize this before investing in the sector. Otherwise, you might be tempted to sell when the sector is doing relatively poorly (when things are about to begin looking up again) or buy at the peak when the companies are reaping a windfall (when growth is about to go into reverse).

It is better to buy when prices are at a cyclical low than when they are high and hitting the headlines.


From the ground. Upstream - Exploration and production (finding and mining the oil and gas.)

To the Pipelines.  Ships and pipelines (transporting the oil and gas to refineries and then again to the end users.)

To the Refineries. Downstream - refining (breaking apart crude oil into its component parts and refine it into end products, such as gasoline, jet fuel, and heavy lubricants.)

To the Consumers.  Downstream - marketing (operating petrol and convenience stations, as well as marketing fuels for industrial uses and electricity production).



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http://klse.i3investor.com/blogs/PublicInvest/80441.jsp

Oil & Gas - Pause and Replay…

Author: PublicInvest   |   Publish date: Tue, 28 Jul 2015, 09:59 AM 

…from 2HFY15 onwards as the market seems to have digested the shock of the oil price collapse and subsequent fluctuations, companies have continued business as usual. PETRONAS too has taken the opportunity to restructure their contract terms and award structure. They have launched a Cost Reduction Alliance, Coral 2.0, an industry-wide effort to expedite cost discipline, but are not cutting investments in innovation and research-related projects of which its CEO Datuk Wan Zulkiflee commented “stands to win in an increasingly difficult playing field”. In view of the lower oil price to be the new „normal' level, we believe the sector would be re-rated and thus retain our Overweight call. We anticipate contract types in the pipeline to include engineering, procurement, construction, installation and commissioning (EPCIC), fabrication, maintenance services and various jobs for the Refinery and Petrochemical Integrated Development (RAPID) project. Meanwhile, Iran has been keeping everyone on their toes as United Nations Security Council endorsed a deal to lift the nation's economic sanctions, but place strict limits on its nuclear programme. The agreement is still pending approval from US Congress and nuclear inspectors' confirmation that Iran is complying with the terms however, thus would unlikely be removed until next year. Assuming the successful end to the sanctions, the oil output post sanctions, is estimated to be an additional 1m bbl/day.
Global O&G market. Sentiment in global markets is currently weak, spurred by crude oil futures hitting 4-month lows after a steep fall in China's stock markets. China currently the world's largest energy consumer could be signaling concern on its economic health, while evidence of a growing crude glut is building up. Oil price has also been pressured with rise US drilling activity with data showing 21 rigs added last week, the most in over a year. The financial pressure faced by oil majors with severe earnings dips in the latest quarter has fueled concerns further. Much of this is resulting from the lower prices that oil field service companies are charging their customers to continue its works. The situation is further heightened by capex cuts in upstream spending, which have filtered through to the oil service providers, first-hand. Our concern remains on how long oil prices would remain low (or fall lower). Further weaknesses could be seen if the rebound continues to be delayed, as smaller drillers may lose their financial support and encounter debt or liquidity crises. We urge investors to focus on companies with reliable cash flow at present and to be cautious about rapid growth at this juncture.
The domestic O&G market is treading along in a more positive light, largely supported by PETRONAS' initiatives. The domestic market is more protected as its “contractor” is largely the country's national oil company (NOC) which continues to sustain and enhance oil production. PETRONAS will continue to spend, but to revert to the previous capex levels of c.RM40bn/year which we believe would still continue to stimulate the domestic O&G industry nevertheless. The cost of oil production for this region also averages between USD30 to USD40/bbl hence still below current oil price levels deeming operations to still be viable.
Overweight. We had recently upgraded our recommendation to Overweight, in anticipation of upcoming contracts that was expected since 2H14 but was halted due to the oil price uncertainties. Malaysia O&G counters are trading on average at c.13x PE, vs. high double-digit PEs in the past and thus we see potential upside. Our top picks are Uzma (Outperform, TP:RM2.98), Bumi Armada (Outperform, TP: RM1.48 and Petra Energy (Outperform, TP: RM1.88).
Coral 2.0. Under Coral 2.0, 11 key initiatives have been introduced to better implement plans and review the potential estimated savings target of between RM4.0bn and RM7.5bn, to be achieved before the end of the next 5 years in response to the decline in global oil prices. 25 petroleum arrangement contractors (PAC) in Malaysia including Royal Dutch Shell plc, Repsol S.A.'s subsidiary Talisman Energy Inc., Total S.A., Exxon Mobil Corp. and ConocoPhillips Co. have signed on to share best practices under CORAL 2.0 and are on the look-out for innovative platform designs that can be standardized across field developments to reduce capex and project delivery cycles. Key milestones include i) Proactive Demand Management, ii) Spend Consolidation, and iii) Driving Innovation. The initiative aims at instilling a cost effective approach across the industry, while uplifting the benchmark of the industry to a world-class level. This involves collaboration and operation with global best practices in Malaysian E&P.
Outcomes of Coral 2.0 workshop. Agreed since end-March, 8 initiatives to be implemented include; i) Joint Sourcing (Material Category), ii) Joint Sourcing (Services Category), iii) Technical Standard, iv) Logistic Control Tower, v) Warehousing Centralization & Common Stocking, vi) Cost Driver Benchmarking for OPEX, vii) Cost Driver Benchmarking for CAPEX, and viii) Late Life Field Optimization. The targeted potential annual cost saving to be achieved before the end of the next 5 years is RM4.0 to RM7.5bn. Factors Affecting Oil Price
Still-possible Greek default shadowing global equity markets, has pushed on the strength of the US dollar. The US dollar is often a form of safe haven during economic turmoil, however does not bode well for oil prices since oil is traded in dollars and thus would be more expensive. Greece's debt crisis moreover could dampen European energy demand.
Federal Reserve interest rate “gradual” hike - a short-term variable that could send oil prices up or down. Where a quicker decision is expected to increase interest rates which could press down oil prices, a looser policy may push prices up.
OPEC may see a change in leadership, as 79-year-old Ali al-Naimi, the Saudi oil minister is anticipated to retire and has a successor being groomed. Mr. Naimi's legacy strategy to keep output steady amidst a growing oil supply glut that caused prices to plummet, would indeed make him memorable. With Iran and Mr. Naimi's potential retirement on the table, the next OPEC meeting in November could be far more exciting. Indonesia was also seen to push to rejoin the cartel since its membership suspension in 2008 when it became a net oil importer. Indonesia wants to secure supply contracts with OPEC members, following its plans to ramp up its refinining capacity and thus would need crude supplies to fuel the production. They are seen to be aggressive in lobbying for this and could be reinstated by as early as the November meeting.
Geopolitical escalations, in particular in the Middle East and between Russia and the US.
IEA landmark report on recommendations to achieve “peak emissions” by the end of this decade.
Iran’s “appealing” oil contract terms include a collection of attractive contract terms to international oil companies which would pay more for higher production. It is also rumoured that Iran may even be prepared to offer production sharing contract (PSC) terms. It is also believed that Iran needs to JV with international oil majors to share its technology. With the world powers reaching a historic agreement to lift the sanctions on Iran but place strict limits on its nuclear programme.

Top Picks

Uzma will be buoyed by i) full year contribution from MMSVS (Hydraulic Workover Units), ii) full year contribution from Premier Enterprise Corporation (PEC) for trading of chemical and other commodities in oil refinery, iii) increase in strategic stake in Setegap Ventures from 30% to 49%, and iv) remuneration fee when RSC production begins 2HFY15.
Bumi Armada (BAB) will be supported by its long-term contracts coupled with its reputable execution abilities that would allow it to be enhanced by new contracts. We remain positive on BAB, considering its initiatives to stay focused and to dissolve potentially non-viable divisions such as the Oilfield Services division amidst the oil price uncertainties landscape. Earnings growth will be sustained by its RM25.6bn orderbook, comprising of long-term FPSO projects such as Kraken, 15-06, Madura and the latest Malta floating storage unit (FSU), BAB's foray into the liquefied natural gas (LNG) business.
Petra Energy will see the i) early activation of the Topside Major Maintenance Services (TMM) contract by PETRONAS Carigali Sdn. Bhd. (PCSB) for SBO effective since 4 July 2014, and will last until 20 May 2018. ii) Higher work orders for the PANM contract. iii) The KBM cluster RSC whereby Kapal and Banang Fields have produced c.4.0mbbl of oil to-date, with an average of c.700,000bbl/quarter. The Group has taken key measures to manage costs and operation expenditures while exploring new opportunities to attain new revenue streams.
Source: PublicInvest Research - 28 Jul 2015

Friday 24 February 2012

Gas Malaysia, Petronas sign new agreement


Published: 2012/02/24


KUALA LUMPUR: Gas Malaysia Bhd yesterday signed a new agreement with Petroliam Nasional Bhd (Petronas) to supply an equivalent of 492 million standard cubic feet per day (MMScfd) of natural gas.

The 10-year contract will start from January 1 2013, with the option to extend for another five years.

The new deal will replace the existing agreement for a total gas supply of 382 MMScfd, which will expire on December 31 this year.

The contract is aimed at providing a long-term supply security of natural gas to Gas Malaysia's existing customers, the company said in a statement yesterday.

The additional 110 MMScfd will enable it to expand its supply to new customers, it added.

Gas Malaysia was incorporated in 1992 to sell, market and distribute natural gas as well as construct and operate the natural gas distribution system within Peninsular Malaysia. 

It is owned by MMC-Shapadu (Holdings) Sdn Bhd (55 per cent), Tokyo Gas-Mitsui & Co (Holdings) Sdn Bhd (25 per cent) and Petronas Gas Bhd (20 per cent).

Read more: Gas Malaysia, Petronas sign new agreement http://www.btimes.com.my/Current_News/BTIMES/articles/gess/Article/#ixzz1nFhoIvPU

Monday 26 December 2011

Uncovering Oil And Gas Futures

Posted: Apr 28, 2011


James Vitalone


ARTICLE HIGHLIGHTS
  • New information regularly disseminated to the market induces price volatility.
  • Weekly oil and natural gas supply data is published by the EIA.
Prices for crude oil, crude oil products and natural gas futures constantly change in response to new information and reflect the adjustments being made to previous and prospective expectations. The relative size and duration of those adjustments often depend on the nature of the new information and the way it is received. Unanticipated new information quite often induces extreme price volatility creating a price shock. For example, the 1973 oil embargoby OPEC members caused oil prices to spike to historical highs.

New information regularly disseminated to the market also induces price volatility, which can range from barely noticeable to extreme because even though the information is anticipated, its content may not be in line with the market's expectations. This is particularly true of the data periodically released on oil, petroleum products and natural gas inventories. Here we'll cover where the information for this industry comes from and when to expect it. (For background reading, see Oil And Gas Industry Primer.)      

Where the Data Comes from

Weekly oil and natural gas supply data is published by the Energy Information Administration (EIA), an independent agency of the United States Department of Energy. In fulfilling its responsibility as policy advisor to the Department of Energy, the EIA's job is to objectively collect, interpret and analyze all energy-related data.

The EIA schedules the weekly publication of data highlighting U.S. crude oil and petroleum products inventory levels each Wednesday through two separate reports. The first, called the Weekly Petroleum Status Report 
is distributed mid-morning and features raw inventory data along with recent commodity and product spot and futures prices. The second report, This Week In Petroleum, is available later in the afternoon. In addition to more extensive data points, this report includes commentary by the EIA about the most recent data.(To learn more about futures, see Futures Fundamentals and Fueling Futures In The Energy Market.)

The EIA makes its report on U.S. natural gas storage levels available each Thursday. Similar to its oil reports, it also releases two separate reports; the Weekly Natural Gas Storage Report is released mid-morning in the form of a much smaller "flash" report. It's similar to its crude oil counterpart in that only the raw storage data is included. Additional data points and the EIA's detailed analysis of the morning data is published in the Natural Gas Weekly Update in the afternoon.

These reports are available at no cost and can be received by email automatically each week once you sign up at the EIA's website.     

Like the Energy Information Administration, the International Energy Agency (IEA) serves as the energy policy advisor to the 26 countries comprising the Organization of Economic and Cooperative Development (OECD). Also like the EIA, it collects, interprets and analyzes data related to energy. However, unlike its U.S. counterpart, the IEA's data relates to global crude oil supply and is released with the publication of the monthly Oil Market Report. Data presented each month is given a detailed analysis and provides a perspective for the IEA's updated crude oil price outlook, which is also included in the report. A paid subscription is required to receive the current report when published.

Crude Oil Inventories 

Crude oil is the primary refinery input; therefore, any changes in the level of crude oil inventories from one reporting period to another not only impact the price of their underlying futures contracts, but will also affect the price of underlying futures contracts of associated refined products like gasoline. The petroleum inventory data showing the level of U.S. crude oil inventories first highlights the portion of current inventory produced within the U.S. then it highlights additional data indicating the portion of total crude oil inventory that was imported(Fore more, check out Understanding Oil Industry Terminology.)


More specifically, U.S. petroleum product inventory data pertains to the level of refined products, such as motor gasoline, jet fuel, distillate fuel oil (source of diesel fuel) and residual fuel oil that are readily available. Like crude oil inventories, petroleum product inventories data also identifies the portion that is the result of imports. In addition to the impact on refined product futures prices caused by both changes in crude oil and refined product inventories, volatility in refined product futures prices can also be attributed to changes in the portion of total inventories that has been imported. Underlying contract price volatility is likely to increase upon evidence suggesting that the proportion of imported refined product to total inventories is increasing.

Natural Gas Data 

Published natural gas inventory, or "storage," refers to the network of more than 400 locations throughout the contiguous 48 states. It is designed to highlight the volume of natural gas that can be readily delivered to natural gas consumers, principally in the U.S. This includes power generation plants, industrial and commercial users, and households. Like crude oil and petroleum product inventories, natural gas storage data provides a look at absolute levels as of the reporting date as well as changes to those levels from prior periods. However, unlike crude oil and petroleum product inventories, owing to characteristics that largely prevent it from being transported over particularly long distances, storage level data represents natural gas coming only from U.S. production efforts. (Learn more in Natural Gas Industry: An Investment Guide.)

The Effect on Oil and Natural Gas Futures Prices             

Information concerning crude oil and natural gas supply levels will affect the price of underlying futures contracts as the market undergoes a process of reconciling and adjusting past expectations, as well as readying new ones based on the most recently reported data. Moreover, the extent to which some or all of the actual data departs from expectations is manifested by the degree of resulting price volatility. For example, energy future prices tend to rise following an inventory report that indicates that gasoline inventories remained unchanged, whereas analyst prediction may have expected that inventory to rise.

For related reading, see Price Volatility Vs. Leverage
James W. Vitalone, CFA, is an oil and gas investment banker with Oberon Securities in New York. He has more than 25 years of experience in the investment services industry. Previously, Vitalone was a buy- and sell-side securities analyst for 15 years, covering companies in the oil and gas, drilling, and oil service and natural gas industries. Prior to that, he was a portfolio manager working with institutional and high net worth clients.

Vitalone has a Bachelor of Business Administration in finance, an MBA in accounting, a Juris Doctorate degree and has served as chairman of the CFA Institute's U.S. Advocacy Committee.


Read more: http://www.investopedia.com/articles/optioninvestor/07/oil_gas.asp#ixzz1hcnuA9Id

A Guide To Investing In Oil Markets

Posted: May 12, 2011

Tony Daltorio


ARTICLE HIGHLIGHTS
  • You can invest in oil-price fluctuations without opening a futures account.
  • One way is to invest in stocks of oil drilling and service companies.
The oil market can be very confusing to both the professional and individual investor, with large price fluctuations sometimes occurring on a daily basis. This article explains the forces driving the market and how to have a financial stake in oil-price fluctuations without opening a futures account.

Price-Driving Influences
Demand
The Organization of Petroleum Exporting Countries (OPEC) and the International Energy Agency estimate the current world demand for oil at between 86 million to 87 million barrels per day in 2008. When the price of oil rises, this decreases demand in the United States, but demand from growing emerging market economies is expected to increase as these countries industrialize.(For related reading, see What Is An Emerging Market Economy?)

Some emerging market economies have fuel subsidies for consumers, and an estimated one-quarter of the world's demand for oil in 2008 comes from nations that have such subsidies. However, subsidies are not always beneficial to a country's economy, because although they tend to spur demand in the country, they may also cause the country's oil producers to sell at a loss. As such, removing subsidies can allow a country to increase oil production, thus increasing supply and lowering prices. In addition, cutting subsidies can decrease any shortage of refined products have been alleviated, since higher oil prices give refineries an incentive to produce products, such as diesel and gasoline.

Supply
On the supply side, in 2008, approximately 85 million to 86 million barrels of oil were produced each day. The discovery of new reserves in Brazil in 2007 is a bright spot, but the oil fields in Mexico and the North Sea are experiencing steep declines in production. (For more on oil production shortfalls and their implications, read Peak Oil: What To Do When The Well Runs Dry.)

In OPEC, most countries do not have the ability to pump out much more oil. Saudi Arabia, the one exception, has an estimated spare capacity of 1.5 million barrels of oil per day as of 2008.

Nigeria has also become important to the oil market, but the country has a history of instability and rebel attacks, which can severely curtail oil production in this country. These rebels, who, attacked a deep-water drilling vessels far offshore in June 2008, brought Nigeria's oil production to the lowest levels in 25 years. As a result of the attack, the country pumped out only 1.5 million barrels per day thereafter, instead of the 2.5 million barrels per day it could be producing. (For more on how supply and demand impact the price of oil, read What Determines Oil Prices?)

Quality
One of the major problems the oil market faces is the lack of high-quality "sweet" crude, the type of oil that many refineries need to meet stringent environmental requirements, particularly in the United States. Much of the high-quality oil imported into the United States comes from Nigeria and surrounding African nations; according to the U.S. Department of Energy, together, Nigeria and Angola exported more oil to the United States than Saudi Arabia in 2007.

Speculation
Aside from supply and demand factors, another force driving oil prices has been investors and speculators bidding on oil futures contracts. Many major institutional investors now involved in the oil markets, such as pension and endowment funds, hold commodity-linked investments as part of a long-term asset-allocation strategy. Others, including Wall Street speculators, trade oil futures for very short periods of time to reap quick profits. Some observers attribute wide short-term swings in oil prices to these speculators, while others believe their influence is minimal. (For more on trading oil futures, read Become An Oil And Gas Futures Detective.)

Investment Options
Regardless of the underlying reasons for changes in oil prices, investors who want to capitalize on energy price fluctuations have a number of options. One simple way for the average person to invest in oil is through stocks of oil drilling and service companies. (For help in how to choose specific companies in the industry, see Oil And Gas Industry Primer.)

Several sector mutual funds invest mainly in energy-related stocks as well. (For more information on sector mutual funds, see An Introduction To Sector Funds.)

Investors can gain more direct exposure to the price of oil through an exchange-traded fund (ETF) or exchange-traded note (ETN), which typically invest in oil futures contracts rather than energy stocks. Because oil prices are largely uncorrelated to stock market returns or the direction of the U.S. dollar, these products follow the price of oil more closely than energy stocks and can serve as a hedge and a portfolio diversifier. (Learn more about the advantages of ETFs and ETNs in Exchange Traded Notes - An Alternative To ETFs.)

Investors have a number of ETF and ETN options to choose from, such as a single-commodity ETF (e.g., oil only) or a multi-commodity ETF that will cover a variety of energy commodities (oil, natural gas, gasoline and heating oil). There are many choices for investors.(For more information on energy investment options, see ETFs Provide Easy Access To Energy Commodities.)

The Bottom Line
The oil market provides a diverse array of options for the potential investor. From indirect exposure via an energy-related stock to more direct investment in a commodity-linked ETF, the energy sector has something for almost everyone. As with all investments, make sure you do your research or consult an investment professional prior to committing your money, and remember the information outlined above when predicting price changes to help ensure a profitable investment.

For alternative-energy investment options, read The Biofuels Debate Heats Up.
Tony Daltorio worked for more than 20 years in the investment business. Most of those years were spent with Charles Schwab & Co., both as a broker and a trading supervisor. As a supervisor, he oversaw, at times, dozens of employees. Daltorio was trading supervisor during the 1987 crash and was responsible for millions of dollars of customers' orders.


Read more: http://www.investopedia.com/articles/economics/08/investing-in-oil-markets.asp#ixzz1hckEW4QD