Oil is one of the most important commodities in our global economy and that is why it’s one of the most heavily traded ETFs.  Unfortunately, there has been a lot of disappointment on the part of investors who feel their ETFs haven’t kept pace with the rising oil prices.  Others have chosen to use leverage, but done so at the wrong time and had disastrous results.  The purpose of this blog is to help individual investors choose the oil etf that is right for them.  We will show you what has worked best in the past and give you clear winners and losers.   There are many Oil ETF products to choose from but you will see only a select few have been the clear winning investments.


There really are four different types of Oil based ETFs to choose from:

#1 – The Oil Futures ETF – USO, OIL, DBO and USL

#2 – Leveraged Oil Futures ETF – UCO (long), SCO (short)
DTO is a futures based short ETN

#3 – Oil Stock ETFs – XLE, XOP and OIH (actually a HOLDR)

#4 – Leveraged Oil Stock ETFs – DIG (2x long), DUG (2x short)
ERX (3x Long) ERY (3x Short)

We will go in-depth into each of these alternatives to see which one is right for you. In general, the un-leveraged oil stock ETF – XLE or the HOLDR – OIH have provided the most consistent returns for the average long term investor who is not timing the market. The Leveraged ETFs are primarily trading vehicles which should be held for short term trades not long term investments. If you want to hold a commodity based ETF (basically oil futures) then USL or DBO would be the best choice because they have taken extra measures to reduce the negative effects of contango.

Whichever ETF you choose make sure you understand the risks prior to investing. The oil market can be extremely volatile so make sure you fully understand the risks before investing.