The oil industry is a large economy and has an effect on all other economies. For investing in oil it is necessary to understand how it functions. It is an industry that is largely vulnerable to political currents, demand and supply. There are many ways in which oil investments can be made depending on the risk appetite of the investor.
To gain direct exposure to the oil industry, ETFs are the best solution. They operate like shares but their value is based on a specific index or asset. ETFs are not as simple as they sound. The 'contango' affect can devalue your fund when the future delivery prices of oil are higher than the current oil price. It is best to consult a reputed stockbroker before purchasing an ETF, if you are not well versed with the oil industry.
Alternatively, investors can buy shares of oil companies to make an oil investment. These can be mid-cap or low-cap companies, depending upon your investment capabilities. Its always good to invest in a sound company. Most profitable ones offer dividends which seems a good investment.
Also when you invest in funds exposure fluctuating oil prices is inevitable. These funds are exposed to many legs of the oil industry such as in oil rigs, refineries or the transportation end of the industry. You will need to study the past performance, current and future strategies thoroughly before investing in a fund. Assessing these funds will also give you a deeper knowledge of this industry works.
For investors with high a risk appetite, spread betting presents an irresistible lure. It is a huge gamble that wouldn't pan out if the market turned against you. Only the hardened investors who understand how the economy really moves can really make a knowledgeable bet. Otherwise you are in deep waters with only a prayer on your lips.
Investing in the oil industry may seem a bit daunting and terrifying, for a person who is new to it. However, it is not rocket science and you can find end number of safe investment opportunities in the oil market at the touch of a button. Advice from stockbrokers, investor friends will also help you bridge the gap. Investment opportunities in this industry should not be disregarded as they project huge potential future profits. If your play your hand well immense gains can be made from the fluctuating oil prices. Best not turn your back on such lucrative investment options that allow you exposure to a global industry.