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Best Oil ETFs to Buy In 2021

ETFs are another favorable alternative the financial market offers for traders and investors. Since there are so many options to choose from, we have created a list that covers the best oil ETFs to trade in 2021. 

ETFs or Exchange Traded Funds are groups of assets like commodities, shares, or bonds that are categorized according to their sector, region, or strategy.

What is an oil ETF?

An oil ETF tracks the financial movements in the oil and gas industry. Some of the security baskets can be made up of limited partnership interests or shares. In the case of the oil ETF, it would be a pool of commodities, but it can also be a group of petroleum companies. 

An oil ETF allows you to invest in the industry without having to hold the commodity. However, oil is sold in the form of futures. This means that the oil price is locked up at a determined level and will be paid out when the futures contract comes to an end. 

What oil ETFs do is to sell the contract before it expires. This way, the fund’s performance depends on the selling or buying price of the futures contract.  

Invest in oil ETFs in 3 steps

1

Open a trading account

An account is not difficult to open. On the broker’s website, click on the button that offers you to sign up or register. The broker then will ask you for basic personal information like name, phone number, email, and the account type you’d like to have. Once you have filled it in, you will receive a verification link to your email. You will need to use it for your account activation.

2

Choose oil ETFs

Once your account has been activated you will be allowed to make a deposit. Look at the available methods. Some of these can be credit card, debit card, e-payment, or bank wire transfer. Be aware that your broker might require a minimum amount.

3

Place your trade

Once your deposit is credited into your account you should find it in your account balance. Now you are ready to place your first trade. Find the buttons that take you to the available ETFs. In case your broker offers you suggestions about the amount of trade, it is a good idea to already know if you will buy one or more oil ETFs. This way, you can find the right balance for you.

Where can I trade oil ETFs?

The best oil ETFs to buy will be available by online brokers. The best brokers are the ones that are regulated and include your country in their jurisdiction. They should also offer customer service that fits your needs. See if they have live chat, email, phone numbers, or FAQs. 

Good brokers should also offer accounts that suit your needs, goals, and your capital. They should also provide trading platforms that can either be used on your browser or downloaded to your desktop or smartphone to trade on the go. 

We have added a table of our top 3 selected brokers below. We believe these are the best brokers in 2021 based on their financial experience and performance. 

1
Min. Deposit
$1
Exclusive promotion
Our score
10
0 Commissions and no deposit minimums
Registered with and regulated by SEC and FINRA
Loss of cash protection
Start trading
Pros:
0 Commissions and no deposit minimums
Registered with and regulated by SEC and FINRA
Loss of cash protection
Payment methods
Full regulations list:
2
Min. Deposit
$250
Exclusive promotion
Our score
9.3
CFTC Regulated exchange based in the US
Trade around the clock, how you want, when you want
100% defined risk trades on Forex, Stock Index Futures and Commodities underlying markets
Start trading
Pros:
CFTC Regulated exchange based in the US
Trade around the clock, how you want, when you want
100% defined risk trades on Forex, Stock Index Futures and Commodities underlying markets
Payment methods
ACH, Debit Card, Wire Transfer
Full regulations list:
CFTC
Trading on Nadex involves financial risk and may not be appropriate for all investors.
3
Min. Deposit
$50
Exclusive promotion
Our score
8.7
Access over 220 of the most popular company shares
Trade on spreads from 1 pt on UK shares
Go long or short on global top companies
Start trading
Pros:
Access over 220 of the most popular company shares
Trade on spreads from 1 pt on UK shares
Go long or short on global top companies
Payment methods
Debit Card, Bank Wire, ACH, Credit Card, PayPal
Full regulations list:
NFA, CFTC, FCA, FSA, IIROC, CIMA, FFA Japan, MAS, SFC of Hong Kong
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 74% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

Best oil ETFs to buy now

  1. UCO - ProShares Ultra Bloomberg Crude Oil
  2. DBO - Invesco DB Oil Fund
  3. USO - United States Oil Fund
  4. OILK - ProShares K-1 Free Crude Oil Strategy ETF
  5. OIH - VanEck Vectors Oil Services ETF
  6. IEZ - iShares U.S. Oil Equipment & Services ETF
  7. GUSH - Direxion Daily S&P Oil & Gas Exp. & Prod.
  8. UCO - ProShares Ultra Bloomberg Crude Oil 
  9. PSCE - Invesco S&P SmallCap Energy ETF
  10. BRNT - WisdomTree Brent Crude Oil

UCO - ProShares Ultra Bloomberg Crude Oil

Issued by ProShares, UCO initiated in 2008. It tracks the Bloomberg Commodity Balanced WTI Crude Oil Index. As a commodity pool, it has $985.84 million worth of assets under management and its expense ratio is 0.95% 

DBO - Invesco DB Oil Fund

With 2007 as its issuing year, DBO tracks an index of crude oil futures contracts. It has an average daily trading volume of $6.87 million and a total of five holdings. Its assets under management are valued at $497.43 million. It has a one-year average daily return of 9.88%. 

USO - United States Oil Fund

Since 2006, USO has tracked mostly short-term futures contracts but also the US dollar. It includes 4 commodities, and its expense ratio is 0.79%. It has a daily average trading volume of $173.05 million and $3.32 billion in assets under management. 

OILK - ProShares K-1 Free Crude Oil Strategy ETF

OILK is exposed to oil futures contracts of three-month duration. Issued in 2016, it has an expense ratio of 0.68%. It has $67.55 million assets under management and a daily average volume of $880.77 thousand. 

OIH - VanEck Vectors Oil Services ETF

Since 2001, OIH tracks an index that holds 25 of the most important and biggest US oil service companies. It has 24 holdings with the US being the leading country (94.85%) followed by Italy. Its average daily trading volume is $67.91 million. 

IEZ - iShares U.S. Oil Equipment & Services ETF

IEZ has been in the market since 2006. It tracks indices that hold oil companies that offer services such as oil equipment or oil fields. It has 22 holdings from the USA. Its assets under management are estimated at $149.13 million.

GUSH - Direxion Daily S&P Oil & Gas Exp. & Prod.

GUSH was created in 2015 and is dedicated to US oil companies that provide exploration and production services. Its expense ratio is 1.17% with an average spread of 0.06%. Its assets are valued at around $571.52 million. 

UCO - ProShares Ultra Bloomberg Crude Oil 

With 2007 as its inception date, UCO tracks indexes with futures contracts of WTI crude. The expense ratio for this ETF is 0.95%, while the average daily trading volume amounts to $88.57 million. Its assets under management have a financial worth of around $985.84 million.

PSCE - Invesco S&P SmallCap Energy ETF

PSCE is an all-US oil ETF with an expense ratio of 0.29%. Launched in 2010, it now has 34 holdings with oil and gas exploration being the leading sector. Its average daily trading volume is $828.56 thousand, and its assets under management are rated at $41.10 million. 

BRNT - WisdomTree Brent Crude Oil 

BRNT tracks the Bloomberg Brent Crude Subindex since its inception date in 2012. Its expense ratio is 0.49%, and it has an average three-month return of 43.58%. Its assets under management are valued at $388.906 million, while its average 10-day trading volume lies at $49,956. 

Expert tip on investing in oil ETFs

To invest in the best oil ETFs successfully, it is crucial to understand how the market works, what oil ETFs are, and how you can benefit. Breaking news or major global events can change the course of your ETF. It is a good idea to know when to buy or sell while trading.

Why trade ETFs?

ETFs are becoming increasingly popular in the market because they offer smaller risks compared to other assets, portfolio diversification, and they are more flexible. 

Oil ETFs can be a good trading or investment choice if you know how to make the market opportunities your own. However, it is important to be cautious when speculating on price movements. These types of ETFs give you direct exposure to oil prices and futures contracts which are usually exclusive to financial firms. 

Frequently Asked Questions

  1. This will depend on your needs, goals, and financial situation.

  2. It is always a good idea to look at the market before investing or trading. This way you can make decisions based on knowledge.

  3. Any trader or investor can buy and sell oil ETFs as long as they have a financial intermediary, such as a broker.

  4. ETFs can offer a basket of stocks, commodities, or bonds where you can buy a portion of the underlying asset. A share is a unit of stock.

  5. Beginners are not limited to investing as long as they have a good financial base and trade without emotion.

  6. According to reports, 19 ETFs that are traded in the US market have a total value of $9.91 billion of assets under management.