Depending on who you’re listening to, oil demand is either going to go up or down; and these conflicting reports are sending oil prices and exchange traded funds (ETFs) that track the commodity going back and forth like a lie detector test. John Wilen of the Associated Press says that prices rose this morning on the International Energy Agency (IEA) forecast for an increase in demand. However, prices then fell after the government’s report that inflation jumped in November. It was the largest jump in two years.
Now energy traders are worried that this means demand could take a hit, even though the IEA said that oil demand will actually rise next year. Then OPEC has a more mixed forecast: demand will grow, but the outlook for economic growth – particularly in the U.S. – isn’t so good. Analysts are questioning both of them, since recent signs say that demand is actually falling.
So, who’s right? Only the future will reveal all. But there are many oil related ETFs available depending on the view you share. Two ETFs were created to track the price of oil. U.S. Oil Fund (USO) invests in futures contracts and the newly launched United States 12 Month Oil Fund (USL) was developed to track the spot price of oil. These ETFs don’t come without risk, so make sure you understand what you include in your portfolio.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.