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Trading on the recovery in Oil prices.


Wellieboy59

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Hi everyone,

I personally think the price of oil will recover sharply over the next year and want to trade on this.

I cannot seem to work out on IG whether I should be using shares dealing (an Oil ETF) or CFD, or spread betting. It looks as though share dealing and spread betting are free of CGT, but the disadvantage of spread betting is there are only daily or quarterly expiries whereas I want to invest for longer. Is there anything else I have missed.

All advice welcome please and which oil product o trade would be helpful...also any leveraged products ?

Thanks in advance for your help.

Jezza.

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Jezza,

The only real difference here is CGT.

If the benefit of writing CGT loss is of no benefit to you then spread betting would be possibly be the way forward certainly if you want a leveraged product. (but be careful of the contract size not to expose your position)

Im looking at a long shot too and expect it to rise over the next 4-6 months to at least $45 (WTI) and on to $55 

I am buying forward contracts (MAY) as (JUN) are a little pricey.

The plus here is that with forward contracts you do not get charged overnight funding charges which can quickly mount up, the downside is that they cost you a bit more initially on the initial spread cost when you open the contract. I haven't done the maths however I am told by IG  that the breakeven is approx 11 days. Therefore if you intend to hold for longer than 11 days then a forward may be for you.

Again be careful as the price could well drop sharply if the Saudis & Russians cant make a deal this week. The rut could last quite a bit longer, but interestingly everyone is losing right now USA-Saudi-Russia.

They must do a deal or bleed all their state savings away.

Good Luck!

 

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