[Typhoon]

$this->bbcode_second_pass_quote('DantesPeak', '
')I think many are underestimating the effect of the oil ETF. When we hear about weekly oil inventories, the total amount sounds impressive. But in terms of value as compared to the $ trillions in investment funds, the total amount of oil inventories is only about the value of the 50th largest company by stock value.

[DantesPeak]

$this->bbcode_second_pass_quote('Typhoon', '')$this->bbcode_second_pass_quote('DantesPeak', '
')I think many are underestimating the effect of the oil ETF. When we hear about weekly oil inventories, the total amount sounds impressive. But in terms of value as compared to the $ trillions in investment funds, the total amount of oil inventories is only about the value of the 50th largest company by stock value.

[mistel]

OK, A couple of things. Does "USO" have to buy futures contracts to cover it's positions? I would assume YES. Also, I assume it is not as easy to short a ETF as it is a futures contract, and that the typical stock market investor looks for things to go up, generally. This would lead me to believe that as "USO" grows, it would mostly be long positions, which USO would cover with futures contracts, which would push up prices, which would attract more investors to USO, which would push up prices, and so on.... $100 BBL?

Please correct me if I am wrong about ETF's. I trade futures but have no knowledge of ETF's

One trade that I do so I don't miss out when the Sh*t hits the fan is I buy out of the money oil futures options. I buy them about 4 months out. I bought $83 calls as they were cheap enough that if they expired worthless I won't care TOO much, but if oil hit $100BBL, I can pay off the mortgage

Peter

[oilluber]

$this->bbcode_second_pass_quote('zberry', 'S')omeone correct me if I'm wrong, but doesn't this seem like the no-brainer investment of a lifetime? My god. I know it's tied to the futures, but how can this possibly lose you money over the long term, assuming you buy and hold?

[DantesPeak]

$this->bbcode_second_pass_quote('mistel', 'O')K, A couple of things. Does "USO" have to buy futures contracts to cover it's positions? I would assume YES. Also, I assume it is not as easy to short a ETF as it is a futures contract, and that the typical stock market investor looks for things to go up, generally. This would lead me to believe that as "USO" grows, it would mostly be long positions, which USO would cover with futures contracts, which would push up prices, which would attract more investors to USO, which would push up prices, and so on.... $100 BBL?

Peter

[Backtosteam]

This was supposed to start trading Friday, but I couldn't find the symbol. Anyone know what the deal is?

[cudabachi]

There have certainly been many published stories by ´experts´ in the silver market who believe that the new silver ETF will ultimately push silver prices higher, so I assume the same case could be made for USO.

However, as my dad always said, ¨an expert is a guy who learns more and more about less and less until he knows everything about nothing¨....so I guess we should take it all with a grain of salt. Having said that, I´ll still be buying USO.

[DantesPeak]

The primary difference between the silver ETF and the oil ETF is that the silver ETF willl store the physical silver it owns in London.

Since silver already advanced 80% in the last six months, it would not be surprising if silver did not go up more for the time being.

Oil is still below the highs of last fall, so the oil market has a different character.

[MOCKBA]

If Delta pilots would strike on April 17 or shortly after the price of oil will go down. If they keep Delta's jets grounded for at least 2 weeks there would be no problems with jet fuel in US for the remainder of 2006. Now, if Delta pilots would strike, Delta would be done as a company, so there would be many jets on the ground for a while, and a lot of jet fuel that nobody would need. So, if Delta pilots would strike, would we see oil bellow $60?

If US demand for gasoline would be flat this summer, considering higher then average crude inventories, would US - the world largest consumer buy more just to keep price up? I don't think so. With gas at $3 vs. $2.30 would US demand for gasoline be higher or lower or flat? Could it be that $3+ gas would flat the demand and may be even curve it lower? Could that suggest $60 oil sometime in mid-summer?

Now, they are raising interest rates to cool US economy. If economy would peak sometimes this summer, with interest rates at 5+%, would the demand for oil be higher or lower? Would it warrant oil above $60?

Now, what if China would surprise with lower then expected growth rate? Say 5%? Would this crash oil prices?

[cudabachi]

$this->bbcode_second_pass_quote('MOCKBA', 'I')f Delta pilots would strike on April 17 or shortly after the price of oil will go down. If they keep Delta's jets grounded for at least 2 weeks there would be no problems with jet fuel in US for the remainder of 2006. Now, if Delta pilots would strike, Delta would be done as a company, so there would be many jets on the ground for a while, and a lot of jet fuel that nobody would need. So, if Delta pilots would strike, would we see oil bellow $60?

If US demand for gasoline would be flat this summer, considering higher then average crude inventories, would US - the world largest consumer buy more just to keep price up? I don't think so. With gas at $3 vs. $2.30 would US demand for gasoline be higher or lower or flat? Could it be that $3+ gas would flat the demand and may be even curve it lower? Could that suggest $60 oil sometime in mid-summer?

Now, they are raising interest rates to cool US economy. If economy would peak sometimes this summer, with interest rates at 5+%, would the demand for oil be higher or lower? Would it warrant oil above $60?

Now, what if China would surprise with lower then expected growth rate? Say 5%? Would this crash oil prices?

[BitterSweetCrude]

$this->bbcode_second_pass_quote('mistel', 'O')K, A couple of things. Does "USO" have to buy futures contracts to cover it's positions? I would assume YES. Also, I assume it is not as easy to short a ETF as it is a futures contract, and that the typical stock market investor looks for things to go up, generally. This would lead me to believe that as "USO" grows, it would mostly be long positions, which USO would cover with futures contracts, which would push up prices, which would attract more investors to USO, which would push up prices, and so on.... $100 BBL?

Please correct me if I am wrong about ETF's. I trade futures but have no knowledge of ETF's

One trade that I do so I don't miss out when the Sh*t hits the fan is I buy out of the money oil futures options. I buy them about 4 months out. I bought $83 calls as they were cheap enough that if they expired worthless I won't care TOO much, but if oil hit $100BBL, I can pay off the mortgage

Peter

[BitterSweetCrude]

$this->bbcode_second_pass_quote('mistel', 'I')f that is how it is, I think it will definately push up prices. I don't know many people who even understand the idea of a "short" position. It is counter intuitive. I think investors will generally only take long positions in "USO" and this will push-up prices as futures contracts are bought to cover them. Who takes delivery of oil from the NYMEX anyways? I can guarentee you EXXON is not down there buying there oil, they have reserves. I don't know the numbers but I would bet that very few of the futures contracts traded ever get delivered. The price of oil on the NYMEX is like aspirin at a 7-11. You only buy it if you have to, and know you are getting ripped off.

[mistel]

If that is how it is, I think it will definately push up prices. I don't know many people who even understand the idea of a "short" position. It is counter intuitive. I think investors will generally only take long positions in "USO" and this will push-up prices as futures contracts are bought to cover them. Who takes delivery of oil from the NYMEX anyways? I can guarentee you EXXON is not down there buying there oil, they have reserves. I don't know the numbers but I would bet that very few of the futures contracts traded ever get delivered. The price of oil on the NYMEX is like aspirin at a 7-11. You only buy it if you have to, and know you are getting ripped off.

[UIUCstudent01]

Question-comment thing:

Wouldn't megaprojects be factor for the short-term? And since the short-term seems to matter for this Oil ETF (if I'm wrong, then tell me), it seems like you really need to pay attention to to the megaprojects and if they are going to be delayed or are going to make a difference...

Oh, and if Nigeria or some other country implodes...

Also, on the long-term, don't you think that Iraq *may* make a difference in 4 to 6 years from now.... There's all sorts of factors in this that make it seem like the oil price will stay level or go down rather than up.

Or maybe I'm just being optimistic tonight.

[JBinKC]

USO finally traded today. Although I won't probably buy any shares in it, I think it is great that I can have the option to buy oil directly in my retirement accounts if need be.

[DantesPeak]

You can get various information about the US Oil Trust at this web site:

Amex

It will be interesting to follow the total shares outstanding and trading volume developments.

BTW - While there are no obvious tax conseqeunces for IRA/retirement accounts for US investors, these may be treated as commodity investments for regular trading accounts.

[Backtosteam]

$this->bbcode_second_pass_quote('mistel', 'O')ne trade that I do so I don't miss out when the Sh*t hits the fan is I buy out of the money oil futures options. I buy them about 4 months out. I bought $83 calls as they were cheap enough that if they expired worthless I won't care TOO much, but if oil hit $100BBL, I can pay off the mortgage

Peter

[Jellric]

Is there a oil futures options primer available?

Right now I am playing oil by trading in stock options on oil companies. One drawback is there is no 1-to-1 relationship between the oil price and the underlying stock. I would like to know how oil futures options compare to stock options. It sounds like the principle is the same, but I would like to know more.

[Typhoon]

$this->bbcode_second_pass_quote('Jellric', 'I')s there a oil futures options primer available?

Right now I am playing oil by trading in stock options on oil companies. One drawback is there is no 1-to-1 relationship between the oil price and the underlying stock. I would like to know how oil futures options compare to stock options. It sounds like the principle is the same, but I would like to know more.

[cudabachi]

Apparently at Schwab, USO is not a marginable stock.