The price of oil has fallen about $10 per barrel over the last
month as the tensions in Syria and around the world have
subsided. Within the last week, the price of the commodity fell
even further due to the government shutdown and fears of a
potential ripple affect through the global economy.
On Friday, the price of oil is once again rising due to
Tropical Storm Karen is expected to turn into a hurricane in the
Gulf of Mexico. There is a possibility the storm could shut down
production for a couple of days.
Investors need to look at the situation from both a short-term
and long-term view. In the short-term, there is the hurricane,
government shutdown and little news out of Syria. All three could
change dramatically at any point in the coming days. The
hurricane will obviously pass, the government could come to an
agreement and Syria is like a tinderbox ready to go up in
The longer-term outlook for oil prices is based on
supply/demand. If the global economy continues to expand at the
current pace, it will lead to a higher demand for oil and the
question will be if supply can keep up with the pace? Then we
must sprinkle in unknown short-term factors such as the three
In the end, it is not an easy commodity to invest in due to
multiple factors. However, there is a strategy that involves
using the energy ETFs and buying for the long-term when
short-term factors create opportunities. The government shutdown
and the "calm" in Syria and the Middle East at this time have oil
down and the United States Oil Fund (NYSE:
) sitting on support. If USO can hold above the $36 level, it
could be setting up for a bounce as soon as the government
shutdown is resolved.
Other energy ETFs to consider buying on pullbacks to support
are the SPDR Select Sector Energy ETF (NYSE:
) andMarket Vectors Unconventional Oil and Gas ETF (NYSE:
All three ETFs mentioned are very different in composition,
but all three should perform well if oil is able to continue its
long-term trend higher in the very near future.
(c) 2013 Benzinga.com. Benzinga does not provide investment
advice. All rights reserved.
Free Trading Education -
Check out the free events taking place on Marketfy
this week. Spaces are limited. Sign up today.