High Oil Prices Are Great for ETFs, Not For Consumer

February 25th at 1:00am by Tom Lydon

287281490 The recent triple-digit crude oil prices have impacted a certain type of exchange traded fund (ETF) and has pleased many investors.

Rob Wherry for Smart Money explains that a new breed of investor is buying ETFs that follow the price movements of crude oil, or ones that own firms that take it out of the ground and sell it at the corner gas station. United States Oil (USO) is up 53.6% in the past year and deals in oil futures.

One catalyst for price jumps is that we’re in the middle of a commodities bull run. It’s elementary supply and demand.

But bull markets always come to an end, and no one can predict when. Commodities are extremely volatile, prone to uncontrollable forces such as factory accidents, geopolitical upheaval and good old Mother Nature.

You need to keep your eye on these kinds of investments. And you don’t want to get caught up in the buying once it’s already run.

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.

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