mplaut

Best Investments for Rising Oil

See this article:

"USO All the Drops and None of the Gains"

seekingalpha.com/artic...

for a well argued presentation of the long-term inadvisedness of holding USO and other commodity ETFs.

Although you might do okay for a while, the steady month-to-month loss in the rollovers is not good for your investment health. He also explains how sharp traders take advantage of the rollovers and make them worse.

USO started off at the same value as crude and is now about a third of its value.

Contango: How It Affects Crude Oil ETFs and ETNs

USO, as an ETF, owns futures contracts directly. OIL, as an ETN, does not. It is a pure promise on the part of Barclay's Bank to pay the owners an amount linked to the oil component of the Goldman Sachs Commodity Index. As such there is no tracking error for OIL relative to its index. If there is contango, the risk is to the index, not to the fund except as it tracks the index. But it is interesting to see that USO and OIL track each other almost exactly.

See: finance.yahoo.com/q/bc...

Welcome to a New World of Investing

Petrobank is not a pink sheet company. It is a billion dollar company that is listed on the Toronto Stock exchange. It is only available in the US through the pink sheets, but look for it in Toronto and you will see.

I am not recommending it, but it is growing production, and it has a new method of producing heavy oil that could revolutionize the production of heavy oil. Of course, this is not exactly the time when such a method is attractive but that could change in a year or so.

Crude Reality: How Long Can Oil Stay Down?

The storage build up, in this case, does not indicate demand drop. You have surely heard about the tankers leased as floating storage. Right now, because of the extreme contango in the futures markets for oil (the price rises very sharply for future delivery) it is a no-brainer to buy oil at today's spot prices and sell it forward at the higher prices.

Storage buildup just reflects this, and does not say anything about demand.

I seriously doubt that very many new barrels will be lifted in the Bakken at all as long as the prices is so low.

Reserves are a function not only of the amount of oil in the ground but also the cost to lift it. At today's prices virtually all of the Bakken oil is not economic.

Marc Faber, Jim Rogers and Boone Pickens - Bullish on Oil

Buying a solid MLP live LINE or EVEP gives exposure to rising oil prices (LINE is hedged about 30% with Puts that gives them the upside of any rises) while paying a more than 15% distribution in the meantime. These are more suitable for long-term exposure.

If you can time the jump in crude, by all means jump into USO right before the jump.