How to Invest in Oil Without Buying Futures or Specific Companies

Ever wonder how to hedge the unavoidable investment you make in oil to get you around every day? Sure, you may consider betting directly on the price of oil through futures trading – one other alternative is to buy stock of a company that refines, extracts, or even explores oil. There is another way to bet for or against oil which I have discovered recently that seems quite on the money – ETFs that aim to deliver a 200% return on a daily performance of an index (in this case an oil future index).

Ultra DJ-UBS Crude Oil (NYSE:UCO) will basically return double the daily increase of oil futures while UltraShort DJ-UBS Crude Oil (NYSE:SCO) will return double the daily decrease of oil futures, and before you decide on betting for or against oil see the prospectus for more information on these exchange traded funds.

Other options, which may be better suited and more safe for the casual investor, include buying into an energy company such as Exxon Mobil (XOM) or Cheveron (CVX) or simply buying oil futures . A more indirect approach at investing in energy prices is to buy other energy resource companies such as Patriot Coal (NYSE:PCX) which roughly follow (and in the case shown below outperform) the price of oil (See chart below).

Patriot Coal vs Oil Future