President Trump has recently complained that gasoline prices are too high at the pump, and negotiations have taken place to urge oil producers to increase output and bring down worldwide oil prices.
This may be worrying to some investors, particularly those that rely on high oil prices. Some industries can benefit from heightened prices and even some Exchange Traded Funds (ETFs) can grow when prices are inflated.
The latest news relating to oil is that prices could exceed $120 per barrel by the end of the year, a price which would hurt consumers at the pump and make things like air transport more expensive, but it could be great news for investors.
International Energy Agency Believes Oil Prices Will Increase
Oil prices have fell by over 8% this month, partially related to President Trump’s intervention and the increased output of major producers. However, in the mid-term, prices are likely to go upwards.
Venezuela’s political climate and Iran sanctions mean that global production has been hit hard, and increasing demand means prices are likely to go up even more. The IEA predicts that by the end of the year, we could be looking at prices that are higher than $120 per barrel of crude.
Investing in Oil on the Stock Market
The easiest way to get exposure to oil in your portfolio is to invest in ETFs from the oil industry. These funds are made up of a combination of oil company stocks and futures, as well as oil-related stocks from exploration companies, industrial suppliers etc.
USO (NYSE ACRA: USO) is the most popular ETF for oil, offering a low-cost buy-in with good historical performance. One-Year growth sits today at 51.50%, YTD is 17.82%, and the ETF has grown 2.91% in the last three months. Keep in mind that oil is one of the most volatile commodities, highly susceptible to geo-politics and national policy.
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