Oil is today the primary source of energy for the world. Though the world is shifting towards renewable sources of energy, oil continues to be strong in demand. This is mainly because oil provides the best energy per unit of cost and no renewable source of energy has been able to match it. Oil prices affect both the micro and macro scale economies. When oil prices go up, countries that are oil exporters have a great time while consumers need to make adjustments to their check books by driving less. In fact, when oil reached its peak of over $140/barrel, many people had to take out instant cash loans simply to continue driving to work. Oil prices are central to world economics and therefore oil is a prized commodity.
Small investors too can get their fair share of the oil boom by remaining invested in oil. There are a number of ways in which investors can use exposure to oil in their financial portfolio. The simplest and most direct way is to invest directly in oil. This can be done through the futures market, where contracts are traded. Thus, an investor seeking for long term profits might buy a futures contract for say 1000 barrels of oil, which will ensure that the investor gets physical delivery of oil at a later date as specified in the contract, say 5 years from this date. Depending on the market conditions at that time, one can make a good profit. Of course, investors hardly need physical delivery, which is why the contract can be traded again in the same market.
One can also stay invested in oil through exchange traded funds that track oil. These are just like the ordinary stocks of companies that are bought and sold on the market each day and thus investors are familiar with the process of buying and selling these. They track the price of oil and have nothing to do with the physical delivery of oil. These are just like ordinary stocks with an underlying value dependent on the price of oil.
Finally, a good option to consider is to invest in the oil companies themselves. This is a neat strategy, which works for investors in a wide array of commodities. By becoming a part of oil companies by buying their stocks, investors are investing not only for today but also for the future. This is because oil companies are actively seeking to expand into other energy sectors, primarily renewable sources of energy such as solar and wind, apart from their main business of oil. By investing in the stocks of oil companies, investors can get a piece of the future, as the world will only move towards higher energy consumption. Since stocks are easy to buy, investors can simply take instant cash loans out for this deal, which will have rich dividends in the future.