Skip to main content

Owning oil ETF takes the sting out of buying home heating oil

Earlier this week I had this year's first load of heating oil delivered for my drafty, 100 year old house. The cost was a good 25% higher than last year. I was astounded.

Based on emotion, I resolved to find my personal energy hedge against rising prices.

A year or so ago, as a result of rising prices at the gas pump, I had bought shares of XLE, the Energy Select Sector SPDR ETF. I naturally turned to that idea again. On thinking about it, however, I recalled that a number of energy companies had seen earnings reduced lately due to a falloff in refining profits. Maybe I could do better than XLE.

So I thought about the ETFs that track indexes of the actual commodities. The PowerShares DB Energy (DBE) tracks a mix of energy products including Light Sweet Crude Oil, Heating Oil, Brent Crude Oil, RBOB gasoline and Natural Gas. The alternative was PowerShares DB Oil (DBO) that tracks only Light Sweet Crude Oil. Performance of DBE was slightly better than the performance of DBO but, for me, DBO seemed easier to understand as there was only one component to it. I am clearly not an expert in energy markets, so from my point of view, the simpler the investment, the better. In addition, the performance of crude oil is discussed endlessly in most financial publications and web sites so I knew it would be easy to keep track of what was going on in that market.

So that was the decision. I purchased shares of DBO on Wednesday at $31.63. As of the end of the week, DBO was up to $32.88 for a quick 3.95% gain. There is continued talk in energy markets that, at this point, $100 oil is nearly a given. That should keep a floor under DBO for a while.

I'll be sure to tell the family they can turn on the thermostat this weekend.

Disclosure: author is long DBO

Comments

Anonymous said…
Who knows where to download XRumer 5.0 Palladium?
Help, please. All recommend this program to effectively advertise on the Internet, this is the best program!

Popular posts from this blog

Brazil - in a bubble or on a roll?

A couple of years ago, no one recognized the real estate bubble even though it was under everyone's nose. Now, analysts and bloggers are seeing bubbles everywhere they look. One of them, they say is in Brazil whose Bovespa stock market index has doubled in the last 12 months. Does the bubble accusation hold water? I don't think so and here are 7 reasons why Brazil is by no means a bubble economy: Exports have held up over the past year thanks to demand from China for Brazil's soya exports and iron ore. This was helped by the the Brazilian government's drive to improve trade links with Asia and Africa. Export diversification, spurred by a more active trade policy and increased focus on "south-south" trade under current president Lula, helped mitigate the decline in demand from OECD (Organization for Economic Co-operation and Development) countries A "sensible" economic framework has been in place since the 1990's. This has included inflation

Thursday Bounce: Trend Busters, Swing Signals and Trend Leaders for July 9, 2009

This is a quick post to announce that we have published Thursday's Trend Leaders, Swing Signals and Trend Busters at Alert HQ . All are based on daily data. Today we have the following: 72 Swing Signals -- A couple of days ago we had 35 signals, today we have twice as many. Happily, we now have 65 BUY signals, a mere 4 SELL Signals plus 3 Strong BUYs. Whoo-hoo! 56 Trend Leaders , all in strong up-trends according to Aroon, MACD and DMI. There are 18 new stocks that made today's list and 60 that fell off Tuesday's list. 48 Trend Busters of which 5 are BUY signals and 43 are SELL signals The view from Alert HQ -- Talk about mixed signals. If you look at our Swing Signals list you would think the market was in the middle of a big bounce. BUY signals are swamping the SELL signals and we even have a few Strong BUYs. Yes, there's a good sprinkling of tech stocks and tech ETFs but the distribution is pretty broad-based with a good number of different sectors represented, eve

Trade Radar gets another update

Some of our data sources changed again and it impacted our ability to load fundamental/financial data. In response, we are rolling out a new version of the software: 7.1.24 The data sourcing issues are fixed and some dead links in the Chart menu were removed. So whether you are a registered user or someone engaged in the free trial, head over to our update page and download the latest version. The update page is here:   https://tradingstockalerts.com/software/downloadpatch Contact us if you have questions or identify any new issues.