The oil industry, or the oil supply side, is also affected by cost-effective projects that are constrained by the price or future price of oil, tax and royalty due to governmental owners of resources, stability of global economies, and reduced exploration of new resources. [Oil ETFs Hit By Supply Glut.]
Huebscher expects oil prices to remain between $65-$80 over the next few years on slower global growth that will suppress demand as supply remains relatively the same. If growth increases between 2012-2015, prices may jump past $100 per barrel, which requires 3%-4% annual demand growth in non-OECD countries and stable consumption in OECD countries, adds Huebscher.
For the short-term, investor should look out for geopolitical risk, credit issues, and other potential dislocations, while for the long-term, investors would consider the correlation with overall global growth.
For more information on oil, visit our oil category. There are a number of ways to play oil prices via ETFs – 17, according to the ETF Analyzer, including these three that own futures contracts:
- United States Oil Fund (NYSEArca: USO)
- United States 12 Month Oil (NYSEArca: USL)
- PowerShares DB Oil Fund (NYSEArca: DBO)
Max Chen contributed to this article.