Stephen Schork: Buy Oil Producers, Not Oil Futures or ETFs

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June 23, 2011 11:09am NYSE:BNO NYSE:CRUD

So you’re tired of getting gouged at the pump and would like to extract some manner of revenge against the high price of oil and gasoline. Great idea. But before you wander into the oil futures pits of the NYMEX or snap up a conveniently bundled ETF


, at least one energy expert says don’t do it.

“With ETF’s, you are effectively locking in a higher cost of purchase every single month,” Stephen Schork of the Schork Report explains. “As your current month expires, you have go out and buy a more expensive month in the forward market.”

OK, so that’s out. But how should you play it?

“Go buy exposure to somebody who knows what to do with that commodity, someone who has the expertise,” Schork says, while pointing investors towards owning “big oil” or integrated oil companies instead. The classic index for them is the Amex Oil Index (^XOI), which includes stocks such as Exxon (NYSE:XOM), Conoco (NYSE:COP) and Chevron (NYSE:CVX).

See the full “Breakout” video below:

Related ETFs: United States Oil Fund (NYSE:USO), FactorShares 2X Oil Bull/S&P 500 Bear ETF (NYSE:FOL), Goldman Sachs Crude Oil Total Return ETN (NYSE:OIL), PowerShares DB Crude Oil Double Short ETN (NYSE:DTO), PowerShares DB Crude Oil Long ETN (NYSE:OLO), PowerShares DB Crude Oil Short ETN (NYSE:SZO), PowerShares DB Oil Fund (NYSE:DBO), ProShares UltraShort DJ-AIG Crude Oil ETF (NYSE:SCO), Teucrium WTI Crude Oil Fund (NYSE:CRUD), United States 12 Month Oil Fund (NYSE:USL), United States Brent Oil Fund (NYSE:BNO), United States Heating Oil Fund (NYSE:UHN), United States Short Oil Fund (NYSE:DNO)


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