Investing in oil is considered an intelligent investment among many investors. In the end, there will always be a demand for oil at the least in the foreseeable future. As a long haul investment, purchasing oil can reap large rewards. There are many ways to start purchasing this commodity. Obviously you won't actually be owning or purchasing the actual oil itself. You are able to purchase individual energy company stocks. You are able to purchase mutual funds that specialize in holdings of oil company stocks. You can buy oil stock futures, contract futures which are typically very expensive. You may also buy commodity exchange traded fund or ETF.

So what is an ETF? It is really a fund which can be comprised of various oil and gas related investments, such as options or futures contracts. Buying an ETF is just a simple means of stepping into oil without stepping into the oil business. As with other funds, you need to carefully see the fine print to oil investment be sure that the fund's goals and objectives meet your investment requirements. Some funds will be more growth oriented and aggressive while others will make an effort to minimize the risk with increased conservative investment strategies. Of course, not all risk may be eliminated, so keep this at heart when investing.

Purchasing oil can be risky because it's linked with countries in volatile elements of the globe. Global economic conditions, wars, terrorism, every one of these factors can cause the buying price of oil to fluctuate wildly. It is this volatility that offers this kind of large opportunity for making money by speculating on the future price of oil. Politics may also play part in oil prices. OPEC has changed output often times to avoid large price reductions in oil prices. Nations such as Saudi Arabia have long favored the US and have increased output to greatly help the US economy at times.

Another component of risk that can affect oil prices is accidents. There were spectacular types of this recently in the Gulf and many tanker oil spills on the years. Because of the level of oil involved, these environmental disasters are hugely expensive to completely clean up and can cause huge losses for oil companies.

As you will see, oil is an unusual commodity with very unique and complicated investment issues. Evaluating the chance is not just a simple matter because, unlike investments in commodities like wheat or orange juice, many factors such as politics and economic climate can effect large changes in oil price. You should be equipped for this when contemplating any oil investment. Risk comes with the territory here, and although there will be a lot of possibility of big profits, the downside is equally as huge and you can finish up losing a significant portion of your investment. As a result of this, only consider investing the maximum amount of money as you can afford to get rid of without creating an economic hardship yourself and for your family.