Investing in oil (crude oil) requires careful consideration. One can take help of Honeyguide Exploration Energy – a Houston based private investment firm focused on direct investments in domestic onshore upstream oil and gas assets.
Since crude oil is a physical commodity, directly investing in oil requires proper management of the physical good. This particularly involves logistic activities that many investors in the market aren’t comfortable. There are different ways to invest in crude oil and listed below are a few.
- Owning Physical Crude – Owning crude oil ensures that your investment value will fall or rise with the market price of crude. Storing crude oil requires exceptional handling because crude oil is volatile and toxic asset. Including storage fees and the shortcomings of directly owning crude oil compensate the advantages for most investors.
- Directly Participating in Oil & Gas Drilling – Participating directly in oil and gas drilling can provide investors superior returns with the advantages of tax incentives specifically found in the US. For instance, along with other tax deductions, investors can write off up to 80% of intangible drilling costs the year a well is drilled.
- Investing In Crude Oil Futures Contracts – Crude oil futures contracts is a way for investors to get exposure to crude oil price without dealing with the storage and other issues involved in owning the physical commodity. Futures contracts help investors arrange buy or sell a definite amount of crude oil in the future, with the price fluctuating with the market.
- Investing In Crude Oil ETFs – Exchange-traded funds (ETF) make it easier for the investors to invest in certain products, and there are crude oil ETFs that offer exposure to the price of the commodity. However, it’s imperative to understand how the ETFs work, because in some cases, they won’t play out the way you may expect and can hence be frustrating as time goes on.
- Investing In The Stocks Of the Companies Operating In The Business of Crude Oil – One of the best ways for the investors to invest in crude oil is through the companies that explore for, refine, produce, transport, and sell crude.