How to Choose a Futures Broker for Energy Investing
Energy Investing: What Is Energy?
Do Due Diligence to Manage Energy Investment Risk

Oil and Gas Price-Tracking Funds

Let’s face it: Energy outlooks vary greatly for investors. You can utilize commodity exchange-traded funds (ETFs) and take advantage of broad trends in commodity prices. A commodity ETF is an exchange-traded fund whose goal is to mirror the performance of a physical commodity like crude oil. Some commodity ETFs are also designed to leverage investors against price declines.

The strategy involves an intimate knowledge of how the particular market typically trades. If you miss the trend, it can end up painful. Use these steps to trade the price of a commodity without buying an actual futures contract for it:

  1. Identify the market weakness or strength.

  2. Look at a price chart for the commodity and identify two higher highs or two lower lows that signal an uptrend or downtrend.

  3. Choose an appropriate commodity ETF whose objectives coincide with that uptrend or downtrend.

  4. Establish your long or short position.

This table is a list of ETFs tracking oil and natural gas prices in which investors can play broad market trends through short and long positions.

Commodity-Tracked ETFs
Fund Name Ticker Commodity Tracked Position Objective/Tracking
United States Oil Fund USO Crude oil Long WTI spot performance
PowerShares DB Oil Fund DBO Crude oil Long Price and yield of Deutsche Bank Liquid Commodity Index
Teucrium WTI Crude Oil Fund CRUD Crude oil Long 2X Daily change in closing settlement prices for futures delivered to Cushing
United States Short Oil Fund DNO Crude oil Short Inverse percentage changes of spot price of oil delivered to Cushing
ProShares UltraShort DJ-AIG Crude Oil ETF SCO Crude oil Short 2X Twice the daily inverse of the Dow Jones UBS Crude Oil Sub-Index
PowerShares DB Crude Oil Double Short DTO Crude oil Short 2X Twice the daily performance of Deutsche Bank Liquid Commodity Index Optimum Yield Oil Excess Return
United States Natural Gas Fund, LP UNG Natural gas Long Seeks to replicate the performance of natural gas prices traded on the NYMEX that is near month and set to expire
United States 12 Month Natural Gas Fund UNL Natural gas Long Seeks to reflect the changes of the spot price of natural gas delivered at the Henry Hub
Horizons BetaPro NYMEX Natural Gas Inverse TSX: HIN.TO Natural gas Short Seeks to replicate the inverse daily performance of the NYMEX natural gas futures contract for the next delivery month
Horizons BetaPro NYMEX Natural Gas Bear Plus TSX: HND.TO Natural gas Short 2X Seeks to replicate two times the inverse of the daily performance of the NYMEX natural gas futures contract for the next delivery month
blog comments powered by Disqus
Energy Investing: The Gasification of Coal
Energy Investing: Natural Gas Markets
Identify and Evaluate Major Coal Miners: United States
How Geopolitics Affect Energy Investing
Energy Investing: The Benefits of Natural Gas