Oil ETF

Dictionary Says

Definition of 'Oil ETF'

A category of exchange-traded funds that invest in companies engaged in oil and gas discovery, production, distribution and retail. Some oil ETFs may be set up as commodity pools – with limited partnership interests instead of shares – and invest in derivative contracts such as futures and options.

The benchmark target for an oil ETF may be a market index of oil companies or the spot price of crude itself, and funds may be focused on just United States-based companies or invest around the world. There are even inverse ETFs for oil and other sectors that move in an equal and opposite direction to the underlying index or benchmark. Oil ETFs will attempt to track their relevant index as closely as possible, but small performance discrepancies will be found, especially over short time frames.

Investopedia Says

Investopedia explains 'Oil ETF'

Oil ETFs have a high level of demand from investors because oil is such a pervasive commodity in the modern global economy. Almost every end product used by people, companies and governments is in some way affected by the price of oil, either as a raw component or through the costs of energy, transportation and product distribution.

Related Video for 'Oil ETF'

Sign Up For Term of the Day!

Try Our Stock Simulator!

Test your trading skills!

Related Definitions

  1. Energy ETF

    A broad class of ...
  2. Natural Gas ETF

    Exchange-traded ...
  3. Peak Oil

    A hypothetical ...
  4. Sweet Crude

    A type of oil ...
  5. Expense Ratio

    A measure of ...
  6. West Texas Intermediate - WTI

    Light, sweet ...
  7. Inverse ETF

    An ...
  8. Commodity Pool

    A private ...
  9. Rig Utilization Rate

    A ratio used in ...
  10. Oil Reserves

    An estimate of ...

Articles Of Interest

  1. Oil And Gas Industry Primer

    Before jumping into this hot sector, learn how these companies make their money.
  2. A Guide To Investing In Oil Markets

    Find out how to take advantage of this market without having to open a futures account.
  3. Peak Oil: What To Do When The Wells Run Dry

    Find out how to invest and protect your investments in this slippery sector.
  4. 5 Investment Risks Created By Global Warming

    Climate-change deniers and believers alike would be wise to prepare for the worst.
  5. How are oil reserves accounted for on an oil company's balance sheet?

  6. Retirement Savings Tips For 35- To 44-Year-Olds

    Learn how the "sandwich generation" can save for retirement while taking care of their kids and parents.
  7. Derivatives 101

    Learn how to use this type of investment as an alternative way to participate in the market.
  8. Risk Tolerance Only Tells Half The Story

    Just because you're willing to accept a risk, doesn't mean you always should.
  9. Finding Your Investing Comfort Zone

    Choosing the right investments for you is the best way to feel comfortable with your portfolio.
  10. Investors: Rely On Your Gut

    Find out how your personality and natural instincts can direct your investment choices.

comments powered by Disqus
Recommended
Loading, please wait...
Trading Center