Global economic growth is expected to boost demand for crude oil in the near term future, paving the path to opportunity for the US Oil Fund (USO), the United States 12 Month Oil Fund (USL), the PowerShares DB Oil Fund (DBO), and the iPath S&P GSCI Crude Oil TR Index ETN (OIL).
According to the Energy Information Agency (EIA), global demand for black gold for the remainder of the year is expected to increase to 86.06 million barrels per day, a 2.1 percent increase from last year. Furthermore, the EIA expects global consumption to jump to 87.44 million barrels per day in 2011, an increase of nearly 300,000 barrels per day from previous forecasts due to resurgent demand in the US, Germany and Japan over the past three months.
On the supply side, inventories in industrialized nations are expected to decline due to increased demand. Furthermore, production from non-OPEC nations is expected to slow down in 2011 and OPEC is expected to leave its production levels stable in the coming months with minor production increases to come in 2011.
At the end of the day, a supply and demand imbalance could form in crude oil leading to higher prices and providing positive price support for the aforementioned ETFs.
Although an opportunity may exist in crude oil, it is equally important to consider the inherent risks that are involved with investing in commodities. Such risks can be mitigated through the use of an exit strategy which identifies when downward price pressure is likely to be seen. Such a strategy can be found at www.SmartStops.net.
Disclosure: No Positions