5 Tips for Investing in the Oil and Gas Industry

5 Tips for Investing in the Oil and Gas Industry

The world’s oil supply is estimated to be worth roughly 3 trillion dollars. That’s a lot of money that countless people try to take a chunk of every day.

Unless you’re going to buy a drill and start pulling oil from the ground, if you’re interested in getting a slice of the oil and gas pie, the best way to do that is to make investments in it. Here’s the thing though… The oil and gas industry is highly volatile and consequently, has cost many people much of their savings, particularly amidst government COVID lock-downs.

If you’d like insight on the oil and gas industry that can enable you to invest more confidently, keep reading. Below, our team breaks down key steps you can take to trade smarter and ultimately, make more money.

  1. Understand the Oil Business

As is the case with any industry you’re investing in, you should understand oil and gas inside and out before pouring your savings into it.

Oil and gas, as we’ve mentioned, is an industry that’s in constant flux. That flux is caused by several factors, many of which pertain to fuel demand (how much people are driving for example) and scarcity (how many barrels of oil are being produced).

Keeping that in mind and understanding what seasonal or other elements can affect scarcity and demand can help you predict how oil and gas prices are likely to rise and fall throughout the year.

  1. Earmark Key Players

As you learn the oil and gas industry, earmark which companies in the space dominate the conversation. Exxon, BP, and others are household brands that you may very well want to invest in. For better, less sourced opportunities, perhaps there’s a contractor that works with those giants that have an IPO you can put money into.

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The more names of players you take down as you get educated, the more opportunities you may find to trade profitably.

  1. Start With Mutual Funds

Rather than investing in a particular company, as you’re getting started investing in oil and gas, you may want to drop money into a mutual fund. Mutual funds are essentially a collection of diversified stocks that can be targeted to a certain sector. So, for example, dropping $100 in a mutual fund could mean dropping $1 into 100 oil and gas companies.

Mutual fund investing instantly diversifies your money and funds are easy to find online.

  1. Keep Your Eye on Administration Changes

Politics are increasingly affecting oil and gas prices. Look no further than today’s US administration’s focus on “green energy” to understand how that’s likely to affect the fortunes of people that are invested in oil-backed energy.

While you can’t do too much on an individual level to affect politics, staying mindful of the national temperature can help you make better money moves.

  1. Talk to Community Members

Oil investing is aided by connecting with people that have ample experience in oil markets. With that in mind, find online community boards where you can connect with other oil investors and share ideas. Check out the Adam Ferrari personal website for advice and networking opportunities.

The more people you know that are doing what you’re doing, the higher your chances are of investing successfully.

The Oil and Gas Industry Is Worth Exploring

Despite everyone’s focus moving to alternative energy sources, the oil and gas industry is still chugging along and isn’t going anywhere anytime soon. Let that empower your confidence when it comes to learning more about opportunities in the space.

For more information on all things finance, explore additional content on our blog.