How to Buy Crude Oil Stocks
11 SEP 2015
Crude oil, or petroleum, is the raw, naturally occurring substance that is refined into gasoline and other oil products. As the modern world depends on crude oil for much of its energy, crude oil stocks are often in high demand by investors. There are many ways to participate in crude oil stocks. However, as the price of oil fluctuates considerably, stocks associated with this commodity tend to also be volatile. Nonetheless, it is a straightforward process to buy crude oil stocks.
Open a brokerage account. Any standard brokerage account can handle the security products for buying crude oil stocks. You can use an online broker for the convenience of direct portfolio access or engage with a full-service firm that makes transactions for you.
Fund the brokerage account with any desired level of capital for your crude oil investments. There is no minimum amount of capital needed to buy crude oil stocks, but some brokers may require account minimums.
Buy the "USO" stock if you want to speculate on the price of oil. This ticker, the United States Oil Fund, does not represent any sole company but rather tracks the overall price of crude oil. This stock is a great way to gain exposure to the crude oil market. Any changes to the price of oil are immediately reflected in your brokerage account.
Buy stocks of companies that engage in the exploration, drilling or refining of crude oil. These stocks include some of the largest companies in the world. Exxon Mobil (XOM) and ConocoPhillips (COP) are popular among crude oil investors. As the price of oil rises, these companies profit from its sale at higher prices.
Buy the stock "XLE" if you want broad exposure to the entire crude oil industry without selecting individual companies. This exchange trade fund tracks the average returns of all the energy companies from the S&P 500 Index. The success of those companies' stocks affects XLE. Thus it is possible for this sector to perform well even if the overall stock market falters. However, the reverse is also true. The energy sector is volatile as a whole. The XLE can be less volatile than individual stocks, which makes it a popular vehicle for those who want to buy crude oil stocks.