Bet on the oil price with an ETC

Fears of a global slowdown have sent oil prices tumbling. Paul Amery explains how you can profit thanks to an exchange-traded commodity tracker.

The price of Brent crude oil is down 30% since an early-March high of US$128 a barrel, reflecting broadening concerns over the world economic outlook. So if you want to bet on a continuing oil price decline, what's the best way to do it?

Exchange-traded commodities (ETCs) have broadened access to the raw materials markets for the average retail investor. Some are designed to go up when the relevant commodities' prices drop. But, by comparison with gold and silver ETCs, which are relatively straightforward, you need to pay particular care with tracker products in those commodities that incur significant storage costs, including energy ETCs. Depending on supply, demand and storage costs, the price of oil, wheat or copper, for example, can be quite different for future compared to immediate (or spot') delivery. This affects your return.

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Paul Amery

Paul is a multi-award-winning journalist, currently an editor at New Money Review. He has contributed an array of money titles such as MoneyWeek, Financial Times, Financial News, The Times, Investment and Thomson Reuters. Paul is certified in investment management by CFA UK and he can speak more than five languages including English, French, Russian and Ukrainian. On MoneyWeek, Paul writes about funds such as ETFs and the stock market.