the title says it all. for a 5 year hold, may not be so bad.

 

I was thinking this as well. Oil hit 35 today and eventually it has to go back up. However don't oil futures expire at a certain point?

 

Apparently the ETFs work by buying futures and selling them near their maturity (usually the price near the maturity is the same or close to the spot price). The problem now is that the future contracts are more expensive than the spot price, so that if oil stays at the same price, the ETF will decline in value. So, might not be such a good deal unless oil is really on the up.

 

^ agreed - there is a lot of oil sitting in tankers and storage now because you can buy oil cheaper now and sell it later (September) for a profit. There is as much as a $12 difference between today's spot price and September's. This more than pays for storage costs assuming you can find a tanker to store it- most tankers are already allocated though.

I think it could take a few months to as much as a year before we see prices trend up meaningfully . I've been wanting to buy USO for some time, but it keeps going down. Friday's trading activity was finally promising, but I would wait for a weekly chart to turn up before buying anything.

 

Look at DIG. Has a bit more diversification; natural gas. Better leveraged too, IMHO.