I'm new to investing in the stock market. I'm completely confused about how I can invest in oil. There's no ticker on the stock market as such. I've read online that I can invest in ETFs or ETN. Is there no stock I can buy that matches the crude oil barrel? What's the closest ticker I can buy that is actually strongly correlated with the oil price per barrel?

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    Each of the various crude oil related ETNs that I'm aware of are based on the daily performance of crude oil futures. This means that they roll over each day. This type of ETN is suitable only for very short term holding since roll over costs and issues related to "contango" pricing means that correlation to underlying spot prices diverges quickly over time - much to your disadvantage. Try comparing a spot crude chart to an oil ETN chart to see how quickly this occurs. It's a rather sobering sight. – user41790 May 19 '16 at 20:41
  • The crude oil futures (symbol CL) price is the price of crude oil. You can go and buy a contract and take delivery of 1000 barrels of oil, or sell a contract and be obligated to deliver 1000 barrels of oil at expiration. – TainToTain May 19 '16 at 23:29
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    (,Typically, of course, you pass the contract along before it expires to someone who actually has a place to put that oil, and take your profit or loss at that time.) – keshlam May 19 '16 at 23:50
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    @TainToTain CL is just one possible product on just one exchange (NYMEX). An identical product traded on ICE is the WTI (West Texas). ICE also offers the BRN (Brent). There are dozens of other products with various terms and conditions and varying levels of interest. And each product has near future and far future months, calendar spreads, options, etc. Check out the CME website for just a sampling. – dg99 May 20 '16 at 0:37

While we're not supposed to make direct recommendations, and I am in no way advising anything, USO an ETF that buys light sweet crude oil futures with the intention of mirroring the price movements of oil.


The papers you would need to buy are called 'futures', and they give you the right to buy (or sell) a certain amount of oil at a certain location (some large harbor typically), for a certain price, on a certain day.

You can typically sell these futures anytime (if you find someone that buys them), and depending on the direction you bought, you will make or lose money according to oil rice changes - if you have the future to get oil for 50 $, and the market price is 60, this paper is obviously worth 10 $.

Note that you will have to sell the future at some day before it runs out, or you get real oil in some harbor somewhere for it, which might not be very useful to you. As most traders don't want really any oil, that might happen automatically or by default, but you need to make sure of that.

Note also that worst case you could lose a lot more money than you put in - if you buy a future to deliver oil for 50 $, and the oil price runs, you will have to procure the oil for new price, meaning pay the current price for it. There is no theoretical limit, so depending on what you trade, you could lose ten times or a thousand times what you invested.

[I worded that without technical lingo so it is clear for beginners - this is the concept, not the full technical explanation]

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