Oil ETF: Is it Profitable to Invest in 2024? - French speaking trader (2024)

THEOil ETFs is one of the best performing index funds on the stock market. Commodity very followed by the investors, this stock market product knows a big variation of course and occupies an important place in the world economy. What do you need to know about Oil ETFs and is it profitable to invest in them? Find in this guide the essential information to know.

Oil ETF – What is it?

The Oil ETF is a tracker that exposes investors in the oil industry. This type ofETF makes it possible to buy in a single order a share of shares of several companies listed on the stock exchange in the oil sector. Apart from investing in oil companies, Oil ETFs also offer traders the opportunity to freely access the oil market. They follow the prices of crude oil benchmarks by involving ETFs indexed to the price of oil.

How Do Oil ETFs Work?

• A mutual fund in the oil industry : Oil ETF is a mutual fund where the company creating the ETF buys securities in the oil sector so that investors can track the benchmark oil index.
• Titles in different forms: The securities that make up the oil ETF can be shares in an oil company. It can also be oil purchased from derivatives such as futures contracts.
• Products accessible directly to investors : Thanks to the purchase of the Oil ETF, investors can trade the price of an oil ETF in the same way as other securities listed on the stock exchange to access the energy and black gold market.

How to Invest in Oil ETFs?

1. Select a well-regulated online broker
2. Register with the platform
3. Fund your investor account
4. Select the Oil ETF of your choice and place an order.

What Are the Different Types of Oil ETFs?

• Leveraged oil ETFs: These are ETFs that allow investors to increase variations in the price of the benchmark index that interests them. Among the leveraged Oil ETFs, we can cite the ETF Pro Shares Ultra Pro 3x or the ETF 2x Daily Long Witi.
• Inverse Oil ETFs: These types of Oil ETFs track the benchmark in the opposite direction. It therefore allows the investor who has bet the price of oil to fall to make a gain following the fall in the price of oil.

Best Brokers for Investing in Oil ETFs

The A'svantages and Disadvantages of Investing in Oil ETFs

Benefits

• Exposure to the oil market
• A good way to diversify the portfolio
• Relatively lower fees
• The ability to use leverage

Drawbacks

• Risk of index variation
• The great volatility of the price of oil

In Which Oil ETF Should You Invest in 2024?

1. United States Brent Oil Fund

The United States Brent Oil Fund is an Oil ETF that directly exposes you to the price of Brent oil through futures contracts. Thanks to the good evolution of the course during the last 12 months, those who invested in this ETF were able to enjoy a good return of 44,76%.

• ISIN : US91167Q1004
• Supplier : USCL
• Annual fee : 0,75%

2. Lyxor STOXX Europe 600 Oil & Gas UCITS ETF

The Lyxor STOXX Europe 600 Oil & Gas UCITS is a fund made up of European companies that specialize in the oil sector. It allows you to take advantage of a good number of derivative products via a PEA ETFs for example, accompanied by a policy of distributing dividends by capitalization.

• ISIN : LU1834988518
• Supplier : Amundi
• Annual fee : 0,30%

Coming from one of the largest ETF providers in the world, the iShares Oil & Gas Exploration & Production UCITS is an exchange product to watch closely. This ETF offers you the opportunity to invest in the world's largest companies in the oil and gas industry.

• ISIN : IE00B6R51Z18
• Supplier : iShares
• Annual fee : 0,55%

4. Fidelity MSCI Energy Index ETF

Fidelity MSCI Energy Index ETF is among the largest portfolios made up of 99,20% companies in the oil service. This undiversified fund represents the performance of the energy sector in the US equity market.

• ISIN : US3160924029
• Supplier : Fidelity
• Annual fee : 0,56%

5. Invesco S&P SmallCap Energy ETF (PSCE)

Invesco S&P SmallCap Energy is an ETF listed on Nasdaq. Composed of small companies in the energy sector in the United States, they engage in the production, distribution and maintenance of products in the field of energy.

• ISIN : US46138E1644
• Supplier : Invesco

What Factors Influence the Price of Oil?

• The imbalance between supply and demand
• Weather conditions that can cause production problems
• Economic and geopolitical factors
• The evolution of the exchange rate of the dollar compared to that of the euro
• Production and storage management at the OPEC level

Oil ETF – Is It a Profitable Investment?

Yes, it is quite interesting to invest in the Oil ETF. Despite the context of the global economy and the risk of capital loss, the Oil ETF remains one of the most profitable investments on the stock market. In addition, the price variation constitutes a real opportunity to trade on the price of the Oil ETF with a strong possibility of a rise in the price according to the latest forecasts. To bet your money in this stock market product, it is important to choose a regulated broker. Also take the time to select the best oil ETFs to invest in to grow your investment.