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OIL

What US listed publicly traded vehicle most closely correlates to WTI oil price? Cannot be a K-1 or ETN.
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  • This is more than you asked:
    OILK (WTI;1099), USO (WTI; K-1), BNO (Brent; K-1). These hold oil futures.
  • edited March 15
    Anything better than OILK?
  • I've never put money into a dedicated vehicle for commodities. Nickel and oil these days, are great examples of WHY. Such volatility. The market in Nickel out of London was CLOSED for a WEEK.
  • msf
    edited March 15
    What does "better" mean? You asked for the vehicle that most closely correlates to WTI oil price. Closest and better performing are not the same. Nor do I suspect that any of the 1099 funds would track that closely, because they're likely to use futures or other derivatives. They don't necessarily track the actual (spot) price of commodities. Notice that the spot price never dropped below zero; only the futures did.
    image

    https://etfdb.com/etfs/commodity/crude-oil/#etfs__holdings&sort_name=assets_under_management&sort_order=desc&page=1
    You can check out whichever ones interest you.

    As an example, DBO returned -5x as much as OILK over the past three years (60%+ vs -12%+). On a point-to-point basis (March 14, 2019 to March 14, 2022) WTI nearly doubled, from around $56 to around $100. Neither of these came close to that.
    https://www.eia.gov/dnav/pet/hist/rwtcD.htm
    https://oilprice.com/oil-price-charts/#WTI-Crude
  • Lets try it this way: If an investor believed WTI would rally 30% over the next year, what vehicle would you use? No individual options. No K-1's. No leverage ETF's.
  • Wouldn't an Energy ETF heavy on the oil majors do it for you?
  • Lets try it this way: If an investor believed WTI would rally 30% over the next year, what vehicle would you use? No individual options. No K-1's. No leverage ETF's.

    The answer to that is NONE.

    Commodities that are hard to handle (e.g. oil) or perishable (grains, meats) can be bought only through futures, and those diverge a lot from spot prices. Just think, if you bought barrels of crude oil on the spot market, where would you put it? Only dealers and refiners can handle spot crude. So, as imperfect as futures may be, that is all investors have to play with.

    Precious metals are exceptions because you can buy and store physical gold/silver/platinum, etc and store in home safe or bank locker. There may be small friction in buying and selling (5-15%). And you can buy precious metal futures too. So, there is dual way to handle precious metals.


  • I meant to broaden my question to ask for ANY vehicle (stock, etf etc), not strictly a commodity play. Mark provided a viable choice. Is it the best choice?
  • That is a different question. There are many oil-producers ETFs. The biggest is XLE, then IYE, etc. These being market-cap weighted have huge weights in XOM and CVX. There are options on XLE too. For equal-weights, there is RYE.

    Oil-producers may be involved with E&P, distribution, refining, retail gas pumps, so they will react to oil prices differently, but will have positive correlations.
  • Clarification: You can buy oil futures (or any commodity, as I have done in the past), just be sure to close your position as appropriate so you don't accept delivery! Not sure about anyone else, but I don't have the parking available for a bunch of oil tankers or wheat carriers to park outside. :) FYI if you play with futures or futures-linked products (ETFs, etc) you also have to beware of things like contango which can impact your position sigificantly over time.

    YBB's 8:23pm post offers solid alternatives to owning or playing in the futures market. I myself own distribution and some refining majors.
  • Why not just keep it simple and buy stock in the majors?
  • Ya, I truly don't want to get the least bit complicated with it all. I echo that though, OJ. "KISS IT."
  • edited March 20
    “Lets try it this way: If an investor believed WTI would rally 30% over the next year, what vehicle would you use? No individual options. No K-1's. No leverage ETF's”

    I wouldn’t believe that at these levels! However, if one did think that he might …

    - invest in alternative energy (wind, solar, geothermo)

    - invest in coal producers and / or the railways that transport it.

    - Short the airlines.

    - You might consider drilling equipment providers as fracking would likely make a comeback.

  • I looked into my crystal ball, & I saw gas prices dropping as the presidential election nears. How near, that's up to you to determine !?
  • fyi.....OP on 3/15/22 when WTI price was $96.44. Now $111.
    Regarding Nat Gas... important to remember the extreme shortages this past winter. Prices next Fall might get interesting going into 2023 winter.
  • Are they still burning it off at the well-head ? I haven't seen a night photo taken over Dakota in quite awhile.
  • Refining profit margins as represented by 3:2:1 crack spreads are at record high, $55-60/bbl. I am holding on to some IYE - not yet at all-time high ($57.72, 6/23/14).

    image

    From https://twitter.com/JavierBlas/status/1532125358744551430

    What is crack spread? https://ybbpersonalfinance.proboards.com/thread/102/energy-complex?page=1&scrollTo=658
  • Nat Gas 3/15/21 = $4.57, now $8.96. Waiting winter storage season.
  • mmmmm $9.28 now.
  • edited June 6
    Top Sectors in MTUM After Rebalance (M* data)

    After 5/31/22 rebalance, top 3 sectors of momentum MTUM are healthcare 29.92%, energy 20.67%, consumer staples 16.73%

    Before: IT 31.27%, financials 24.51, healthcare 13.05%

    https://stockcharts.com/h-sc/ui?s=MTUM&p=D&yr=1&mn=0&dy=0&id=p86662937955
  • @yogibearbull thanks for sharing info on refiners. is there a reason you invested in IYE instead of XLE? XLE has outperformed over the long term.
  • I have had both XLE and IYE and I have used them for tax-swaps in the past. But as I have been gradually taking profits via high-ball limit orders, XLE is all gone and only IYE remains. Only XLE has options. Either is good for trade.
  • Energy may have redefined volatility (besides cryptos, of course). XLE was very strong, crashed in June/July, and rebounded now with fury. ALL of its components are again above 200-dMA. If oil remains $90+ (new OPEC-put price?) and crack-spread remain strong, refiners would be swimming in profits and cashflows. This may sound very strange with the talk of recession but then 2022 has been a very unusual year.

    Chart from Twitter Link.

    image
  • edited August 26
    Oil may hovering near 75-100s next few months because of still high inflation and volatility,

    Maybe good to place iron-condor -
  • Maybe good to place iron-condor -
    What does that mean?
  • edited August 26
    Iron-condor is a complex options strategy of pairing a call-spread with a put-spread in the hope that the price remains rangebound.

    I think that oil has too much news and geopolitical (OPEC, Russia-Ukraine war, SPRs) dependence to make any meaningful range predictions. Just look at natural gas where European prices now are beyond any previous imaginations.
  • Thank yogi.
  • Crack-spreads (~refining margins) were about $60/barrel (yes, per barrel) in late-June and now are only (!) $28/barrel. With Brent $94/barrel and WTI $88/barrel, those are still very high refining margins. Twitter Link

    image
  • what causes refiners pricing power to change?
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