You literally have thousands of choices when it comes to oil, oils, oil pipelines, and similar investments in gasoline and natural gas–or other energy investments. However, I will keep this directly to oil and related investments.
Exxon Mobil is the largest company in the world. It’s the juggernaut that keeps on giving to its shareholders.
Yet, Exxon as an individual holding may be too sensitive to everything from environmental laws to alternative technologies to erratic oil prices to world competition. (I think Exxon is a terrific core holding, but it’s important to look at other opportunities.) And, I have to mentioned that Exxon Mobil closed today at $65.00, (it was $75.00 a month ago and was at $95.00 in June 2007). I own XOM, so I am giving full disclosure on it. It’s share price is down because they announced that they are buying XTO for $41B, to get more exposure to natural gas—which will be our bridge fuel to wean the United States off of foreign oil. Natural gas is cheap, is 25% cleaner than gasoline and diesel and there is twice as much natural gas in the U.S. than there is oil in Saudi Arabia. XOM is clearly thinking 10-20 years down the road—but at $65.00 XOM is clearly a bargain stock.
One possibility is to simplify one’s approach. You think oil is going from $73 per barrel to $95 per barrel, then you might only want to deal with that thesis; specifically, you have investments like the Claymore MACROshares Oil Up Tradeable Shares (UCR) and the United States Oil Fund (USO). The former tracks the NYMEX Division Light Sweet Crude Oil Futures Contract whereas the latter follows the spot price of West Texas Intermediate Light Sweet Crude.
It should be noted that USO has been criticized a great deal for failing to capture the intended index in the past. That said, its volume is exceptionally large, making it the preferred method for profiting from rising oil prices. However, USO has lost 10% of it’s value in the last three months—as oil has fallen in price to $73.87 at today’s close on the NYMEX exchange.
Now, back to the price of oil–Crude at $95 This Year? (click on the following link: http://bit.ly/aueQVw ) CNBC is reporting oil could get to $95.00. So, all oil stocks and energy stocks should go up with the price of oil.
(KMP), Kinder Morgan Energy Partners, is a Master Limited Partnership, that has to distribute 90% of their profits to shareholders. This is a great stock that pays about 4% dividend and makes money by transferring oil, gasoline and natural gas through their pipelines. Unfortunately, this stock is at it’s 52 week high. However, if the price of energy (gas, oil, natural gas) goes up or down—people still need these products and they are always making profits for their company–of which 90% goes to their shareholders.
BlackRock Global Energy and Resources Trust (BGR). It invests in common stocks, preferred stocks, convertible securities, warrants, and depository receipts while serving a 5% annual yield distributed quarterly. (And its 2-year track record smooths out the bumpy ride of ever-changing oil prices.) BGR is down about 10% from it’s 52 week high—and is much cheaper than KMP. KMP is trading at $62.62 as of 1/28/10 and BRG is at $23.73 on 1/28/10.
Oil partnerships that trade on the exchanges may not be ETFs per se, but they are important for comparison. Magellan Midstream Partners, LP (MMP) has a yield of 6%+ and a perfect record for raising its quarterly dividend since its 2001 inception. While it is a pipeline, and while gasoline distribution is not necessarily tied to the price of the refined commodity, it’s hard to ignore a solid income producer in the oil patch. MMP is trading at $43.10 today, just a dollar or so off it’s 52 week high.
There is one energy ETF to stay away from. Under no circumstances ever buy UNG (United States Natural Gas Fund). It tracks the spot price of natural gas, and the price of natural gas is just above it’s seven year low. This may be a fund to get into in the future (when our country recognizes the need for cheaper, cleaner burning (25% or more less carbon that oil, diesel, gasoline and coal) and a resource that is in abundance in the U.S.
January 30th, 2010 at 6:31 am
Schlumberger – or however you spell that company.
I think there is an ETF for that.
Google ETF oil wells oil pipelines
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References :
January 30th, 2010 at 6:55 am
It depends on who much money you have. To get in on a couple exclusive wells, you will need some serious capital. Operators wont slice of interest if all you have is a few thousand dollars. Pipelines are even more expensive.
Sometimes you can purchase shares into a trust that invests directly into oil/gas wells. Be careful though. These often can be scams or just crap wells that banks wont lend money for. Other than that, just invest in oil and gas or pipeline companies through stock.
References :
January 30th, 2010 at 7:24 am
Direct investments are usually through Limited Partnerships. And they are more suitable for people in high tax brackets. Master Limited Partnerships are traded on the stock exchanges. The best way for small retail investors is through an ETF like USO or integrated stocks like Exxon or Chevron. Or in the pipelines companies like Plains All American who operate the NYMEX terminal in Cushing Oklahoma.
References :
January 30th, 2010 at 7:42 am
You literally have thousands of choices when it comes to oil, oils, oil pipelines, and similar investments in gasoline and natural gas–or other energy investments. However, I will keep this directly to oil and related investments.
Exxon Mobil is the largest company in the world. It’s the juggernaut that keeps on giving to its shareholders.
Yet, Exxon as an individual holding may be too sensitive to everything from environmental laws to alternative technologies to erratic oil prices to world competition. (I think Exxon is a terrific core holding, but it’s important to look at other opportunities.) And, I have to mentioned that Exxon Mobil closed today at $65.00, (it was $75.00 a month ago and was at $95.00 in June 2007). I own XOM, so I am giving full disclosure on it. It’s share price is down because they announced that they are buying XTO for $41B, to get more exposure to natural gas—which will be our bridge fuel to wean the United States off of foreign oil. Natural gas is cheap, is 25% cleaner than gasoline and diesel and there is twice as much natural gas in the U.S. than there is oil in Saudi Arabia. XOM is clearly thinking 10-20 years down the road—but at $65.00 XOM is clearly a bargain stock.
One possibility is to simplify one’s approach. You think oil is going from $73 per barrel to $95 per barrel, then you might only want to deal with that thesis; specifically, you have investments like the Claymore MACROshares Oil Up Tradeable Shares (UCR) and the United States Oil Fund (USO). The former tracks the NYMEX Division Light Sweet Crude Oil Futures Contract whereas the latter follows the spot price of West Texas Intermediate Light Sweet Crude.
It should be noted that USO has been criticized a great deal for failing to capture the intended index in the past. That said, its volume is exceptionally large, making it the preferred method for profiting from rising oil prices. However, USO has lost 10% of it’s value in the last three months—as oil has fallen in price to $73.87 at today’s close on the NYMEX exchange.
Now, back to the price of oil–Crude at $95 This Year? (click on the following link: http://bit.ly/aueQVw ) CNBC is reporting oil could get to $95.00. So, all oil stocks and energy stocks should go up with the price of oil.
(KMP), Kinder Morgan Energy Partners, is a Master Limited Partnership, that has to distribute 90% of their profits to shareholders. This is a great stock that pays about 4% dividend and makes money by transferring oil, gasoline and natural gas through their pipelines. Unfortunately, this stock is at it’s 52 week high. However, if the price of energy (gas, oil, natural gas) goes up or down—people still need these products and they are always making profits for their company–of which 90% goes to their shareholders.
BlackRock Global Energy and Resources Trust (BGR). It invests in common stocks, preferred stocks, convertible securities, warrants, and depository receipts while serving a 5% annual yield distributed quarterly. (And its 2-year track record smooths out the bumpy ride of ever-changing oil prices.) BGR is down about 10% from it’s 52 week high—and is much cheaper than KMP. KMP is trading at $62.62 as of 1/28/10 and BRG is at $23.73 on 1/28/10.
Oil partnerships that trade on the exchanges may not be ETFs per se, but they are important for comparison. Magellan Midstream Partners, LP (MMP) has a yield of 6%+ and a perfect record for raising its quarterly dividend since its 2001 inception. While it is a pipeline, and while gasoline distribution is not necessarily tied to the price of the refined commodity, it’s hard to ignore a solid income producer in the oil patch. MMP is trading at $43.10 today, just a dollar or so off it’s 52 week high.
There is one energy ETF to stay away from. Under no circumstances ever buy UNG (United States Natural Gas Fund). It tracks the spot price of natural gas, and the price of natural gas is just above it’s seven year low. This may be a fund to get into in the future (when our country recognizes the need for cheaper, cleaner burning (25% or more less carbon that oil, diesel, gasoline and coal) and a resource that is in abundance in the U.S.
References :
I have been trading in securities since 1984. I own XOM, KMP and have owned the other gas and oil companies in the past including MMP and BGR.
January 30th, 2010 at 8:12 am
I would invest in oil pipelines through a LP. ETP, PAA, MMP, and SXL are several that I have invested in. Oil wells through an oil company: XOM, COP, CVX, or DVN. That is the way I would do it.
References :