Analysts and market experts are still all over the place when it comes to oil market projections. But with a growing consensus belief that the bottom is in, the Energy Select Sector SPDR (ETF) (XLE), the United States 12 Month Oil Fund, LP (USL) and the VanEck Vectors Oil Services ETF (OIH) offer three unique opportunities for long-term oil investors to buy low.
Energy Select Sector SPDR (XLE)
Not all of us are oil industry experts, but we still realize the potential long-term benefits of buying low and selling high.
The most diversified (i.e. safest) way to invest in a long-term oil market recovery is by buying the XLE ETF. The XLE includes shares of 38 different types of oil and gas stocks ranging from integrated giants like Exxon Mobil (XOM) to oil services stocks like Schlumberger (SLB) to exploration and production stocks likePioneer Natural Resources (PXD) to oil refiners like Phillips 66(PSX).
This diversification is great in terms of limiting risk, but too much diversification can also hinder gains. Sure the oil market is depressed, but not all oil stocks are cheap. Refiners have boomed during the decline, benefiting from cheap input prices and large crack spreads. In fact PSX’s stock is up 119% in the past five years.
United States 12-Month Oil Fund (USL)
Like its popular ETF cousin, the United States Oil Fund (USO), the USL is…
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