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Long Crude Trade - ETFs


MNC87

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Long Crude Trade

Hi guys,

Given the recent developments on markets since the Coronavirus outbreak and the disputes within OPEC+ crude is now in the low 20-region. Assuming this worldwide mess will get sort out, demand will pick up and that low prices will send some players into bankrupcy, I think investing long term in non-levered crude ETF is best practice. Just getting back to 30 would be a huge profit. Since I invest in pounds, I better get the one the GBP-hedged one (ticker PBRT.L).

Any thoughts? Thanks

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Edited by MNC87
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That's the way to go, you will just need to be patient.

Everything will eventually bounce back, with the proviso that capitalism retains its current form.

A lot of people desire in their heart of hearts for a new, socialist world order.

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@TrendFollower

I understand your point, there will be demand destruction, but you are basing the recovery of oil on just the demand, which will eventually come back maybe in 6 to 12 months. 
My point here is that current price levels are not sustainable for none of the 3 main players; saudis, Russia and US. Most of US's shale oil producers will go bust - most of them in Texas, which by the way is 100% Republican. Therefore, I expect Trump to move in the coming weeks to make the 3 players move a bit curtailing production.

With current environment, I see a floor at low-10s, but it is not an easy task to catch the bottom and therefore a gradual entry, like you recommended is the best way here.

 

 

Don't get me wrong, I am still shorting oil, but I believe current prices are unsustainable and that production will eventually be cut, regardless of what happens with demand.

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  • 2 weeks later...

Did not find anything actually suitable. To invest long term in oil you need ETF made of futures with long duration, while most of the available ones have 1 or 3 months. That is certainly a trap, as we are currently in contango, and therefore the long term correlation will be low.

Any ideas / ETF suggestions would really be appreciated.

Thanks 

 

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