Invest in oil: Oil CFDs, funds & other investments to buy oil as an investment

Christina Clarke
October 4, 2021
How can I invest in oil? Step-by-step instructions for buying oil stocks, CFDs & ETFs
invest-in-oil

The oil price is low, and oil company stocks are grappling with the corona crisis. This could be the perfect time to invest in oil. Although the energy turnaround is on the rise, it will probably be difficult to do without oil in the years to come.

The raw material is needed to produce gasoline and kerosene and produce plastic and other plastics. Moreover, as the economy continues to grow in emerging countries, the demand is still increasing. Therefore, one should deal with the oil investment in detail.

Table of Contents

Where to Invest in Oil The best brokers for investing in oil CFDs, stocks & ETFs compared:

Rating

Min. Deposit

Min. Spread

Assets

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4.9/5
250
0.07
  • Commodities
  • Forex 40 +
  • Metals
  • Stocks
  • Indices
  • Cryptocurrencies
85
2
4.5/5
250
0.07
  • Metals
  • Forex
  • Indices
  • Cryptocurrencies
  • Commodities
  • Stocks

 

254
82
3
58
4.9/5
250
0.07
  • Forex 40+
  • Metals
  • Commodities
  • Stocks
  • Indices
  • Cryptocurrencies

 

480
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How can I invest in oil? Step-by-step instructions for buying oil stocks, CFDs & ETFs:

In the following guide, we show you how to invest in oil by buying oil stocks or trading oil CFDs and certificates, for example. The physical purchase of oil involves far more effort ( and is not recommended by us ), which is why we focus exclusively on trading oil stocks.

ROinvesting

Step 1: Registration with a broker (Roinvesting)

There is an almost unmanageable number of online brokers. And they all have their advantages and disadvantages.

It pays to compare the different brokers in terms of offer, ease of use, customer satisfaction and fees because there are big differences and, of course, simply different expectations.

Is the focus more on an in-house depot app or on a trading platform? Are low fees a must, or is it more about the breadth of the offer? Our editorial team looked at some of these online brokers and came to the conclusion that Roinvesting is the test winner here.

Step 2: deposit

Depositing is very easy with Roinvesting. Just follow the instructions in your account (see screenshot above).

The only thing you have to consider is the minimum deposit amount of € 250.

Here is an overview of all of the payment methods available on Roinvesting:

Payment optionPossible?
Buy oil stocks with a credit card.✔️
Buy oil stocks with PayPal.✔️
Buy oil stocks with Skrill.✔️
Buy oil stocks with a bank transfer.✔️
Buy oil stocks with Neteller.✔️
Buy oil stocks with UnionPay.✔️

Step 3: buy oil stocks.

After you deposit the money, you can buy oil stocks. To do this, look in the search window for the oil stock that you want to buy (in our example, we show buying the BP stock)

After we ” actions have pressed”, a shop window in which we can execute our purchase opens.

It is also possible to set different purchase settings such as Take Profit or Stop Loss.

Congratulations: The oil investment is completed after clicking on “Open Trade”.

Investing in Oil: A Promising Investment?

Will oil still matter in the future? Oil cannot be dispensed with, at least for the next few decades. Therefore, countries that export the raw material should still play a more significant role in their portfolio. A well-known European example that illustrates the opportunities for oil export is Norway.

For a long time, the Scandinavian country was not in a particularly good economic position. Most consumer goods had to be imported, and the lack of domestic exports weakened the economy. However, large oil reserves were soon found off the coast of Norway.

As soon as these were developed in the sixties, the economy of Norway took off. For example, the oil company Statoil (Equinor ASA since 2018) was founded in early 1970 and is Norway’s second-largest company. Anyone who has ever vacationed in the Scandinavian country knows that the prices, but also the wages, are exceptionally high here. This is probably due to the oil trade.

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Investing in Oil: The 4 Best Ways

At the beginning of 2020, the oil price is very low. On the one hand, this has to do with economic competition between Russia, the Arab states and the USA, and with the corona crisis. One topic that keeps making the news is so-called fracking.

Here gases are pumped into a rock in order to transport the oil to the surface. This method is highly controversial among conservationists. In addition, this method is only worthwhile if the oil price is reasonably high.

Nonetheless, the USA, in particular, is increasingly relying on fracking again these days. So there are many different ways to promote oil. But what is the best way to invest in this raw material? The investor has the choice to do this.

For example, he can buy oil CFDs, invest in oil stocks and oil funds, speculate on oil certificates or the oil price or even buy physical oil. We compare the possibilities and take a look at the most popular alternatives.

1. Oil CFDs

If you want to trade CFDs, you need the right CFD broker. In our CFD broker comparison, you can choose the right partner. CFDs are a form of betting on the course of a course. So you look for a listed company whose business field is in the oil sector, for example, Equinor.

Now you follow the latest stock market news to find out how the price is likely to develop. If one assumes that price gains are pending, this bet can be placed. If the case then actually occurs, high profits beckon.

But keep in mind that CFDs are highly speculative instruments. Furthermore, they are mostly coupled with a leverage effect. This means that you can earn many times more with CFDs than when you invest directly in stocks. On the other hand, however, losses are also significantly higher and more likely.

It should be noted that you should be very familiar with CFDs before investing in oil with them. One should not underestimate the risk and, last but not least, have a good feel for the market. If you want to invest a little more conservatively, oil stocks and oil funds are more likely to come into question.

2. Oil stocks – buy oil on the stock market

The vast majority of investors are likely to share want to resort to investing in oil. Here are a few well-known stocks that we think have excellent predictions. If you want to buy oil stocks, you should be at the right time and take a close look at the background of the respective company.

The oil multinationals are not immune to economic fluctuations either. For example, the price of oil is currently comparatively low, so these companies should make less profit. However, if this should rise again, share prices will rise again.

The Shell share

Royal Dutch Shell is one of the largest mineral oil companies in the world. Over 8 billion shares have been issued, and around 1 million investors own Shell shares. The company stands for stability, and the share can be traded directly on the Dutch stock exchange or almost all other major stock exchanges. Right now, the stock is relatively cheap.

This is due both to the fact that the oil price is low and to the crisis situation caused by Covid 19. Therefore, shell stocks should be included in every oil portfolio.

The BP share

Most investors should also be familiar with BP. The London-based oil company operates petrol stations all over the world and serves 13 million customers every day. The company employs over 80,000 people. In 2015, BP was fined over $ 20 billion.

The reason for this was the oil disaster of Deepwater Horizon in the Gulf of Mexico in 2010. Since then, the share has been able to recover. So BP is a classic “Too Big Too Fail” company. This stock should also be considered when building an oil portfolio. It is also relatively cheap and should rise again soon.

The Aramco share

Aramco has only been listed on the stock exchange since December 2019. This may be surprising, as it is the largest mineral oil company in the world. The oil multi from Saudi Arabia shows excellent figures, especially in production. According to the company, it costs only $ 7.5 to make a barrel of Aramco oil.

In contrast, Shell, for example, has to spend over $ 22 a barrel. The numbers speak for themselves. According to the Financial Times, Aramco is the world’s most valuable company. Anyone who wants to invest in oil will find it difficult to avoid the comparatively new share of the world’s largest oil company. Now could be an excellent time to invest in this stock.

The Equinor (Statoil) share

Equinor is the largest Norwegian oil company. In Forbes Global 2000, the oil company is represented in the top 100. This share is particularly recommended for investors who want to have an environmentally friendly side confirmed in addition to investing in oil.

The tax revenues in Norway are mainly invested in renewable energies and their research. So even though Equinor got rich with oil, this company can still be considered the greenest of the oil multinationals featured.

invest-in-oil

 

The ExxonMobil share

Of course, an American heavyweight should not be missing from our list. ExxonMobil is the largest petroleum company in the United States and the eighth largest company in the world. Sales are over $ 290 billion. You can’t go wrong with ExxonMobil stock.

On the downside, of course, there must be environmental degradation in particular. ExxonMobil, in particular, is increasingly using fracking, especially in the USA. You should therefore weigh up whether you want to include this company in your portfolio.

3. Buy physical oil

If you want to invest in oil, you don’t necessarily have to buy stocks or CFDs. E ine Another possibility is the direct purchase of oil. But, of course, there is little point in ordering and storing a few barrels of oil. Instead, you can invest directly in the raw material with certain providers and hope that the price will continue to rise.

Here, of course, the risk is higher than when you invest in oil companies. The price of oil frequently fluctuates, not least because the price of oil can be used as a geopolitical weapon. If you want to buy physical oil or speculate on the oil price, you simply register with the online broker of your choice that carries the raw material. Storage etc., are taken over by third-party companies.

4. Oil certificates

Investors can bet directly on the oil price via a certificate. “Open-end certificates” with an unlimited term are particularly suitable for this purpose. However, especially with these long-term investments, one should bear in mind that this can lead to comparatively high costs. These are created by rolling from one futures contract to the next. However, there are also certificates that have leverage.

This gives investors the opportunity to bet on rising as well as falling oil prices. Thus, certificates can be used as a speculative and hedging instrument if you invest in oil. The choice after the certificate, of course, depends very much on your strategy.

You should always be aware of the currency risk, as oil is traded in USD on futures exchanges. However, the certificate itself is traded in euros or the respective currency. Oil certificates can be traded on exchanges as well as in non-exchange trading directly with the issuer.

Few countries share the resources.

Around 40% of global production comes from 4 countries (Iran, Kuwait, Saudi Arabia and Iraq) around the Persian Gulf. In relation to the total reserves, it is even 75%. Another heavyweight that is often not mentioned is Venezuela.

Due to the political situation in the country, however, it cannot be foreseen when normal funding will be possible again.

In the last few years, the US has expanded the production of oil considerably. By fracking it is possible to extract even smaller deposits at a profit.

Thus the USA has managed to no longer be dependent on imports. However, if the price continues to fall, fracking will become less and less worthwhile.

Long term price vs short term price

However, in the long run, other factors are responsible for the development of the price. In particular, economic growth in emerging countries is responsible for increasing demand.

In addition to SouthAfrica, other industrialized countries are now also trying to use less fossil fuels, which means that it can be assumed that demand from this side will decrease. However, growth in emerging and developing countries exceeds this deficit.

Stable, long-term growth in demand can therefore also be expected in the coming years. However, one must distinguish from this the short-term fluctuations as we are currently seeing them. These will occur again and again in the future and can hardly be foreseen.

However, since there is still no real (widespread) alternative to oil, there is no need to worry as an investor.

So investing in oil makes perfect sense. The question now arises as to which financial product is best suited for this. Depending on whether you are pursuing short-term or long-term goals, the strategies that you should use also differ.

Different Types

First of all, as an investor, you have to find out what you want to trade with. Because oil is not just oil. There are already different types of crude oil, which differ in price and origin. It is also possible that the promotion of one variety has to be suspended for a time while it continues at the other point. However, these are factors that no one can foresee.

  • On the one hand, the Brent Crude Oil variety comes from the North Sea.
  • On the other hand, the West Texas Intermediate (WTI) comes from the USA.
  • Of course, there are also a number of other varieties, depending on their origin.

invest-in-oil

Is it worth investing in oil?

We have now received an overview of the options available to buy oil. But is it worth it? It can be assumed that oil stocks should be worthwhile right now. Both the corona crash and the low oil price pushed stocks down very far.

As a result, oil stocks are currently up to 60% cheaper than they were six months ago. Of course, you don’t know how the prices will develop in the future, but the chances are good that oil will become more expensive again in the future.

If you want to invest in oil, it is best to use an online broker. You will quickly find what you are looking for in our online broker comparison. If you prefer to use CFDs instead of stocks, you should pay a visit to our article on CFD brokers.

 

Investing in oil: forecast 2021

How will the price of oil and oil stocks develop this year? To find out, you can proceed as follows. First of all, the current status is recorded. This is because the corona crisis and the low oil price caused the shares of the oil companies to crash.

For example, Shell was worth over 50% more until a few months ago. But does that mean that stocks will rise again as a result? To do this, you can look at the share price movements before and after the 2008 financial crisis.

Most oil companies lost a lot of value here, too, only to slowly but steadily increase again afterwards. The share prices were strictly linked to the oil price. Of course, it can always happen that unexpected events push the course of individual companies further.

BP, for example, suffered losses in some of its stocks due to the large fine the company had to pay because of the oil spill in the Gulf of Mexico. Since then, however, the share has more than recovered. So it seems very likely that prices could pick up again soon. This should become particularly apparent from the end of this year.

Investing in oil: the bottom line on oil as an investment

It could be shown that one’s portfolio can be upgraded with oil stocks. Anyone who attaches greater importance to the environmental aspect can, for example, fall back on the Norwegian company Equinor. If you prefer to rely on the big players, you should be well advised with the Aramco share, the Shell share or the BP share.

Anyone who invests in oil stocks should take a close look at the company they choose. Since the prices are currently still struggling due to the Corona crisis, it is not unlikely that good profits can be made in some time if you buy oil stocks now.

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FAQs

You can easily buy oil stocks from the online broker of your choice. After registering and making a deposit, you simply select the company and invest in the stock of your choice.

Yes, oil cannot be dispensed within the least at the moment. It is needed for the production of gasoline or kerosene and in chemistry or plastics production. There is currently no getting around oil. However, this could well change in a few decades.

That depends on what type of investor you want to be. Anyone who wants to invest in oil funds is usually one of the more conservative types of investment. Shares, on the other hand, are more directly and more closely linked to the selected company. In addition, you can also invest in oil certificates or other values.

The oil price is often the plaything of geopolitical powers. Therefore, one can never say with certainty how this will develop. Therefore, if you want to speculate on the price of oil, you should deal with the geopolitical strategies of the countries involved. However, those who only want to invest in stocks should primarily concern themselves with the individual companies.

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