How to buy oil?

[EricPhan]

What would be the best way to buy oil (as opposed to oil-related equities)?

- Futures rolled forward (paying for in full to avoid volatility of margin calls)
- ETF (US oil fund - hasn't there been problems with this not tracking the price of oil exactly, though?)

Also, how risky are these in a SHTF situation?

Thanks!

[zoog]

Re: How to buy oil?

What would be the best way to buy oil (as opposed to oil-related equities)?

- Futures rolled forward (paying for in full to avoid volatility of margin calls)
- ETF (US oil fund - hasn't there been problems with this not tracking the price of oil exactly, though?)

Also, how risky are these in a SHTF situation?

Thanks!

Don't know if this is the "best" option or not, but there is Barclay's Oil ETN that launched in mid-2006, ticker is conveniently OIL.

http://stockcharts.com/h-sc/ui?s=OIL

seekingalpha:

Barclays Bank launched its third exchange-traded note [ETN] onto the New York Stock Exchange last week, listing its the iPath GSCI Crude Oil Total Return ETN under the utterly appropriate ticker symbol “OIL.” The new note tracks the performance of an unleveraged investment in West Texas Intermediate crude futures, plus the return that would be earned by an investment of collateral assets in Treasuries.

I think it may track oil better than USO, but the ETN vehicle is... unusual.

The chief difference is that, unlike ETFs, ETNs do not actually hold a stake in the underlying commodity or commodities futures. Instead, ETNs are simply senior debt notes from Barclays PLC, under which Barclays promises to pay you the exact return of the underlying commodity index – minus an expense ratio of 75 basis points per year.

The primary risk here (besides oil suddenly tanking in price) seems to be the solvency of Barclays. Will they still be around, and have any money, at such time as you would want to sell your investment.