Let’s face it: Energy outlooks vary greatly for investors. You can utilize commodity exchange-traded funds (ETFs) and take advantage of broad trends in commodity prices. A commodity ETF is an exchange-traded fund whose goal is to mirror the performance of a physical commodity like crude oil. Some commodity ETFs are also designed to leverage investors against price declines.
The strategy involves an intimate knowledge of how the particular market typically trades. If you miss the trend, it can end up painful. Use these steps to trade the price of a commodity without buying an actual futures contract for it:
Identify the market weakness or strength.
Look at a price chart for the commodity and identify two higher highs or two lower lows that signal an uptrend or downtrend.
Choose an appropriate commodity ETF whose objectives coincide with that uptrend or downtrend.
Establish your long or short position.
This table is a list of ETFs tracking oil and natural gas prices in which investors can play broad market trends through short and long positions.
| Fund Name | Ticker | Commodity Tracked | Position | Objective/Tracking |
|---|---|---|---|---|
| United States Oil Fund | USO | Crude oil | Long | WTI spot performance |
| PowerShares DB Oil Fund | DBO | Crude oil | Long | Price and yield of Deutsche Bank Liquid Commodity Index |
| Teucrium WTI Crude Oil Fund | CRUD | Crude oil | Long 2X | Daily change in closing settlement prices for futures delivered to Cushing |
| United States Short Oil Fund | DNO | Crude oil | Short | Inverse percentage changes of spot price of oil delivered to Cushing |
| ProShares UltraShort DJ-AIG Crude Oil ETF | SCO | Crude oil | Short 2X | Twice the daily inverse of the Dow Jones UBS Crude Oil Sub-Index |
| PowerShares DB Crude Oil Double Short | DTO | Crude oil | Short 2X | Twice the daily performance of Deutsche Bank Liquid Commodity Index Optimum Yield Oil Excess Return |
| United States Natural Gas Fund, LP | UNG | Natural gas | Long | Seeks to replicate the performance of natural gas prices traded on the NYMEX that is near month and set to expire |
| United States 12 Month Natural Gas Fund | UNL | Natural gas | Long | Seeks to reflect the changes of the spot price of natural gas delivered at the Henry Hub |
| Horizons BetaPro NYMEX Natural Gas Inverse | TSX: HIN.TO | Natural gas | Short | Seeks to replicate the inverse daily performance of the NYMEX natural gas futures contract for the next delivery month |
| Horizons BetaPro NYMEX Natural Gas Bear Plus | TSX: HND.TO | Natural gas | Short 2X | Seeks to replicate two times the inverse of the daily performance of the NYMEX natural gas futures contract for the next delivery month |
