How to invest in oil in the United States?Brent v.s. crude

Petroleum, English is OIL, is a kind of Commodity The price of commodities is periodic and affected by many factors.

Petroleum investment is a high-risk, high return investment EssenceThe price of the oil market fluctuates greatly, which is closely related to macroeconomic and political factors.

Petroleum investment has the following Several characteristics The

• High-risk and high return: Petroleum investment usually has the characteristics of high risk and high return.Due to the large fluctuations in the oil market, investors may get high returns, but they may also suffer huge losses.
• High market volatility: The price of the oil market fluctuates greatly, affected by various factors, including changes in supply and demand, geopolitical risks, and natural disasters.
• It is closely related to macroeconomic and political factors: The oil market is closely related to macroeconomic and political factors, such as global economic situations, energy policies, international conflicts, etc.
• Lack of resources: Petroleum is a scarce resource.With the growth of global energy demand, the supply of oil may be limited, resulting in rising prices.Therefore, oil investment can be regarded as an asset allocation method to resist inflation and protect assets.
• Multiple investment methods: Investors can invest oil through various ways, including purchasing petroleum futures, investment in oil stocks, and buying oil funds.

If you plan to start investing in oil, I hope this article will help you.

• Buy the stock of the oil company: You can invest in oil companies listed on the stock market, such as Exxon Mobil(Exxonmobil), Chevron(Chevron) Kangfei Petroleum(Conocophillips), etc.The stock price may be affected by the changes in oil prices and demand through the production and sales of oil.
• Investment Exchange Trading Fund (ETFS): ETFS is an investment fund, holding a basket of oil company stocks or petroleum futures contracts.This can provide decentralized investment and exposure to the entire oil industry, rather than investing in a single company.
• Investment in oil futures (Oil Futures): Petroleum futures are contracts for purchasing or selling oil in the future.This may be a kind of venture capital because it involves accurately predict the future price of oil.
• Investment Main Control Limited Partnership (MLPS): MLPS is an open trading partnership invested in energy infrastructure (such as pipelines and storage facilities).They provide tax incentives and can provide exposure to midstream operations in the oil industry.

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Directory of this article

• What are the types of oil?
• Why invest in oil?
• What are the risks to invest in oil?
• How to invest in oil?

What are the types of oil?

Petroleum is a natural organic matter produced by deep underground and an important energy of modern industry and transportation.Global oil reserves are widely distributed, and the types and quality of oil in different regions are different.Therefore, there are differences in the prices and quality of oil.

There are many types of petroleum, and different types of crude oil will affect their prices and quality.When investing in oil investment, investors need to carefully study and analyze the supply and demand and price trend of the petroleum market in order to choose the appropriate investment type.

Here are several common types of petroleum categories:

• Brent crude oil(Brent Crude Oil): Brent crude oil is a crude oil adopted on the Norwegian coast of the North Sea and the coast of Scotland.It is one of the world’s most important crude oil trading standards.Its price has become an important reference for international oil prices.The origin of Brent crude oil includes Norway, the United Kingdom, the Netherlands and other countries.
• Lightweight low sulfur crude oil(WTI): WTI is oil produced in Texas, USA.It has a lower sulfur content and high quality, suitable for refining high-quality gasoline and diesel.WTI price is also one of the references of international oil prices.
• OPEC basket crude oil(OPEC BASKET): OPEC basket crude oil is mixed by a series of crude oils produced by member states produced by Organization of the Petroleum Export of Countries.Its price is also one of the references of international oil prices.
• crude(CRUDE OIL): The commodity oil refers to the non-processed oil extracted from underground oil storage, which is one of the most important types of oil in the world.The types and quality of crude oil in different places are different.Therefore, there are also differences in the prices and quality of commodity oil.
• Saudi Arabia light crude oil(Arab Light): Saudi Arabia light crude oil is a high-quality petroleum produced by Saudi Arabia.Its sulfur content is low and suitable for the production of high-quality gasoline and diesel.

Why invest in oil?

Petroleum is one of the most important energy sources in the world The demand will continue to grow in the future, which brings long-term stability to the oil market.Therefore, investment oil can provide relatively stable returns.

The oil industry is high Profitability and cash flow This has made some oil companies become high-dividend revenue stocks, which provides investors with a source of investment income.

The oil market and inflation are strong, because the rise in oil prices will lead to rising prices of other goods and services.therefore, Investment of oil can provide a way to inflation and value preservation Essence

Petroleum investment can be carried out in various ways, such as purchasing stocks, ETFs, futures, etc., so it has high flexibility and diversity.

There are also some tax benefits in the oil industry, such as MLPS, which can provide additional return on investment.

What are the risks to invest in oil?

• Market price fluctuation risk: Petroleum prices are affected by various factors such as supply and demand, geopolitics and natural disasters, and the price fluctuations are large.For example, the following is the trend chart of the price of Brent crude oil in the past ten years.It can be seen that its price fluctuations are obvious.
• Political risk: Since oil resources are mainly concentrated in countries and regions with high geopolitical risks, investing in oil may be affected by political factors.For example, some countries may restrict oil exports, or due to conflicts and sanctions, supply interruptions are caused.Below is the fluctuation of oil prices when Arab countries imposed economic sanctions on Qatar in 2019.
• Environmental risk: Petroleum mining and transportation may affect the environment, such as oil leakage accidents may lead to environmental pollution and corporate compensation risks.For example, in 2010, the Gulf of Mexico Gulf brought billions of dollars of fines and compensation to BP.
• Technical progress risk: With the development and application of new energy technology, the market position of oil may be threatened, which will affect the profitability of oil companies.For example, the following is the trend chart of American crude oil and natural gas production.You can see the rapid growth of natural gas production, which reflects the challenges brought by technological progress.

need Notice It is that these risks may interact and overlap, which brings greater risks and uncertainty to oil investment.Therefore, investors should understand these risks and reduce risks through decentralized investment, risk management and other means.

How to invest in oil?

1.Investing in the stock of oil companies?

Here are some oil companies listed in the United States:

2.Invest in oil ETFS

ETF(Index stock fund) is an investment tool that represents an investment portfolio of a basket of stocks, bonds or other assets, and can be listed and traded on the stock exchange.

Petroleum ETF It aims to track the performance of the oil industry and allows investors to obtain the exposure of the industry in its investment portfolio by purchasing ETFs.These ETFs can provide investors with various choices of risks, income and investment styles.

The following are some oil ETFs listed in the United States, arranged from large to small according to the market value:

3..Investment in oil futures

Petroleum futures refer to a financial derivative that trad oil at a scheduled price at a certain time in the future.Generally, oil futures are standard contracts provided by the exchange.Each contract represents a certain amount of crude oil.For example, each contract may represent 1,000 barrels of crude oil.Traders can buy or sell these contracts on the exchange price on the exchange.

The price of oil futures is affected by various factors, including supply and demand relationship, geopolitical factors, weather changes, and currency exchange rates.Therefore, the fluctuation of oil futures prices is usually different from the actual price of the oil market.

Petroleum futures are usually used for speculation or hedging.Speculators try to make profits by guessing market trends, while sidewas try to lock prices through futures contracts to avoid the risk of future price fluctuations.Petroleum futures are also an important tool for price risk management for oil manufacturers and consumers.

If you want to buy oil futures, you can trade on the exchange through a broker or online trading platform.Generally speaking, a transaction account is required and a certain deposit is required to be traded.These trading platforms include:

• Interactive Brokers: This is a world-renowned online broker that provides trading services for various financial products, including WTI Crude Oil Futures on the New York Commodity Exchange (Nymex), and BrunOil futures contracts such as Brent Crude Oil Futures, RBOB Gasoline Futures and Heating Oil Futures.
• TD Ameritrade: This is a well-known American online broker that provides trading services for various financial products such as stocks, futures, and options, as well as petroleum futures.
• Tradestation: This is an online trading platform that provides a variety of financial products such as stocks, futures, options, etc., and also provides oil futures trading services.
• E-Trade: This is a well-known online broker that provides trading services for various financial products such as stocks, options, and futures, including oil futures.
• CME Group: This is the parent company of the Chicago Commodity Exchange.It provides online trading platforms and brokers services, and also provides oil futures trading services.
• IG: This is a world-renowned online trading platform that provides trading services for various financial products such as stocks, futures, and foreign exchange, including oil futures.

Here are a few very important one Grand Commodity Exchange The

• New York Commodity Exchange( Nymex): This is one of the world’s largest commodity futures exchanges and one of the most famous exchanges in the United States.It provides oil futures such as WTI Crude Oil Futures, Brent Crude Oil Futures, RBOB Gasoline Futures, and Heating Oil Futures and other petroleum futures.contract.
• Chicago Commodity Exchange( CME): This is another global leading commodity futures exchange that provides oil futures contracts such as Crude Oil Futures.
• London International Petroleum Exchange( ICE): This is a headquarters in London, which offers oil futures contracts such as Brent Crude Futures.
• Shanghai International Energy Trading Center( INE): This is China’s first exchange-based exchange for crude oil futures, providing oil futures contracts such as crude oil futures.

Here are several common ones Petroleum futures Can be traded:

• West Dedsas medium crude oil futures on the New York Mercantile Exchange (referred to as Nymex) WTI Crude Oil Futures): This is the most commonly used petroleum futures contract in the United States, which represents lightweight sweet crude oil denominated in the US dollar.The price has an important impact on the global oil market.
• Brent crude oil futures on the New York Commodity Exchange ( Brent Crude Oil Futures): This contract represents Beihai Lightweight crude oil priced at the pound, which is one of the most important international oil futures in the world.
• RBOB gasoline futures on the New York Commodity Exchange ( RBOB GASOLINE FUTURS): This contract represents gasoline prices in the east coast of the United States.
• Fuel and oil futures on the New York Commodity Exchange ( Heating ilfures): This contract represents fuel oil prices in the East Coast of the United States.
• Natural gas futures on the New York Commodity Exchange ( Natural gas futures): This contract represents natural gas priced in the US dollar, which is one of the most important natural gas futures in the United States.
• Chicago Commodity Exchange ( Chicago Mercantile Exchange, CME for short) crude Oil Futures: This contract represents lightweight sweet crude oil denominated in US dollars, which is very similar to Nymex’s WTI crude oil futures contracts.
• Micro Western Ciscin Crude Oil Futures on the New York Commodity Exchange ( Micro WTI Crude Oil Futures): This is a newer contract.It is a mini version of the WTI crude oil futures contract on Nymex.Each contract only represents 10 barrels of crude oil.The emergence of this contract provides more choices for investors who want to participate in crude oil futures transactions but less funds.
• Brent crude oil futures (Ice for short) Brent Crude Futures): This is an international oil futures traded in London.It is very similar to the Brent crude oil futures contract of the New York Commodity Exchange, but it is slightly different in some aspects.

4.What is oil MLPS Intersection

Petroleum MLPS( Master Limited Partnerships) It is a special limited co-organ company that mainly operates midstream and downstream businesses involving oil and natural gas resources.They usually focus on collecting, storing, transportation and processing oil and natural gas, such as pipeline transportation, oil storage tanks, gas stations, etc.

Different from ordinary stock companies, Petroleum MLPS operates in a limited partnership.Their partners (that is, investors) invest in these companies and obtain cash returns through division.Petroleum MLPS is characterized by allocating high cash income and tax incentives, so it is favored by many investors.In addition, they usually have stable cash flow because their main source of income is long-term stable transportation, storage and processing protocols.

It should be noted that the investment risk of Petroleum MLPS is similar to other stock investment, but there are some special risks.For example, they are affected by fluctuations in oil prices, and some petroleum MLPS is also affected by government regulations, environmental protection and social responsibility.Investors should learn about relevant risks and conduct appropriate risk management before investing in oil MLPS.

To invest in oil MLPS, you need to choose a suitable agent or online trading platform.Investors can invest through online agents such as Charles Schwab, TD American, Fidelity, etc., or online trading platforms such as Robinhood and E*Trade.When choosing a broker or platform, investors need to pay attention to factors such as relevant costs, trading tools and service quality.

Here is Charlest Schwab as an example.If you want to buy petroleum MLPS on Charles Schwab, you need to open an account first and complete the relevant investor questionnaire.Specific steps are as follows:

• On the official website of Charles Schwab, click “Open An Account” or “Create Account” button, and then select the account type you want to open, such as personal accounts or retirement accounts.
• Fill in personal information and investment information, such as name, address, social security number, tax information, investment purpose, etc.If you are investing for the first time, Charles Schwab will ask you to complete the investor questionnaire to evaluate your risk tolerance and investment goals.
• Waiting for account review and approval.It usually takes several working days to review and approve the account.After the review is approved, you can obtain account information and login credentials by email or telephone.
• Add funds to the account.After the account is approved, you can use bank transfer, check or credit card to add funds to the account.After the funds are added, you can start buying oil MLPS.
• Search for oil MLPS and buy.In Charles Schwab’s trading interface, you can search for the petroleum MLPS and buy it.Please note that every time you buy oil MLPS, Charles Schwab usually charges a certain transaction fee and management cost.

Before buying oil MLPS, investors need to understand the company’s basic situation, financial status, business model and other aspects of the company.This information can be found on the company’s official website, the US Securities and Exchange Commission (SEC) website, and other financial websites.Investors can also refer to the professional oil and natural gas market research reports, as well as research reports from investment banks, fund managers and analysts to obtain more comprehensive and in-depth information.

It should be noted that there are risks to invest in oil MLPS, including price fluctuations, industry supervision, interest rate risks, etc.Investors should learn about relevant risks and take appropriate risk management measures before investing in oil MLPS.In addition, the distribution of oil MLPS is usually cash.Therefore, investors also need to consider taxation factors.