One of the perfect places where you can turn your assets into long-term wealth is investing in oil. Simply putting your money into your savings account may not be enough to make returns. So, if you are planning to invest in oil and gas, you should be focused on investing in oil wells from the best oil company.
Natural oil and gas prices are typically fluctuating because of external factors such as oil discoveries, geopolitical events, latest production technologies, and of course, due to the demand and supply. When looking for an oil company to invest with, you should consider these few factors:
- Decide Where You Stand on Oil Prices
The fundamental questions that you must answer are “What is the oil price here?” and “Where these oil prices head from here?” But since the levels of the commodity are identified by global demand and supply, these 2 factors are the huge factors you need to consider. Other factors such as OPEC production decisions, economic climate, overall oil price trend, and the strength of dollar also affect the cost of oil. Reading and understanding these trends is crucial to getting started in investing in oil well production.
*As of this writing 1/04/2017, oil pricings are moving back up and many top advisors are expecting oil prices to continue to climb due to the support of oil well production from President Elect Donald Trump. If you want to find out how to pick an oil company, then don’t miss this chance to get started before the masses. Visit our free oil well investment consultation page to request contact by an expert that can give you some free resources and information to get started.
- Invest Accordingly
Apparently, oil stocks benefit when oil prices are rising. “Upstream” companies in particular (companies that are drilling to produce natural oil and gas) have a greater incentive in drilling and have higher opportunities to profit when oil prices are increasing. The key is to get in early on new oil well investment opportunities in Texas.
However, there are energy stocks that can still soar in markets with bearish commodities. For example, refiners earn higher profit margins if the prices of oil are low. They usually market a refined product—they sell the refined gasoline that you buy at pumps and they make money on the difference between the prices of gas at pumps and the costs in acquiring and refining the product. You can buy drillers if you think the price of crude will rise.
- Stocks, Exchange-traded Funds, and how to pick an oil company?
If you already know which oil company to invest in, you should now decide on how you would like your investment to be concentrated. If you have researched and found cheap stocks, you might like to buy from 2 different oil companies. However, investing in oil stocks and exchange-traded funds are easier then investing in oil wells. But the payout for investing in oil wells is greatly higher. Read here about why investing in oil stock is not as good as investing in oil well directly.
If you want to find out how to pick an oil company whether for stocks or for direct oil well investment, then you need to start with doing quality due diligence research on both the company and the opportunity. Download our free guide here (invest in oil) or request a free consultation to find out more.
On the other hand, if you are not an accredited investor then you need to stick to investing in stocks, you can simply research where crude prices are heading. You might want to buy exchange-traded funds just like a stock but gives exposure to names in an industry.
- Long-term or Short-term?
Because of esoteric facts about how leveraged ETFs are constructed, there is a chance to lose money over a period of time. You should also be aware of this. Only use them on short-term wagers. They do not pay dividends. Long-term investors should not overlook these dividends because they can add up in time.
The oil market can provide you an array of diverse options for a potential oil company to invest in, from the indirect exposure through energy-related stocks to direct investments in commodity-linked ETF. In all your oil and gas investments, do not forget to research and consult investment professionals. Remember all the points mentioned above to help you in ensuring a good investment.