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USO worth picking up at < 42?

By Jason on Tue, 2007-01-23 12:19

United States Oil Fund (USO) provides some pretty significant exposure to the trending of oil. With oil trading at near two year lows, I pose two questions...

1) Is now the time to add some exposure to a portfolio? Is there more upside than downside in the near future?

2) Is USO the best vehicle to do so?

Thoughs/Comments?

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George on Thu, 2007-01-25 00:49
Title: 1) The price of oil is much

1) The price of oil is much more rational now, but I'm not sure there is a margin of safety yet.

2) I think picking individual stocks is a safer bet than a fund like USO. There is a large variance in the quality of US oil companies. With a fund, you often get the bad with the good.

Actually, I'm looking into a non-US oil company. Petroleo Brasileiro (PBR), also know as Petrobras, was just mentioned in the Barron's Round Table and looks like it could be worth researching. Now I just need to time to dig through the details.

Nick on Thu, 2007-01-25 03:01
Title: I don't think the USO is the

I don't think the USO is the best way to speculate on oil prices. I think you might want to focus on US refineries instead.

Jason on Thu, 2007-01-25 23:53
Title: I think the variance to risk

I think the variance to risk is partially the reward. When investing directly in the commodity, you eliminate any lead time and overhead that companies that operate in the oil industry may have.

i.e. a direct correlation between price and return.

Nick on Sat, 2007-01-27 17:55
Title: Interesting thought Jason- I

Interesting thought Jason- I hadn't looked at it that way.

Mark Perkins on Sat, 2007-03-10 02:00
Title: "Actually, I'm looking into

"Actually, I'm looking into a non-US oil company. Petroleo Brasileiro (PBR)"

I was just looking at them yesterday and added them as a holding in a virtual stock exchange game i'm in with a few other people. I don't know much about the oil business. I'm wondering if their profits are correlated with rising oil prices? If they increase profits from rising oil I see little downside because oil can only go up as a non-renewable resource I think.

Mark Perkins on Sat, 2007-06-16 00:52
Title: " Petroleo Brasileiro

" Petroleo Brasileiro (PBR)"

up to $121 now.

George on Sat, 2007-06-16 08:29
Title: PBR

Now if only I invested in Petrobras (PBR). Somehow I never came back to researching this stock. I guess I just wasn't too keen on oil at the time.