Getting in on oil now can be started by online tracking of the price of oil, is something most everyone can do. Free quotes will be time delayed. Real time quotes are available for a fee. With the fast pace in the changes in oil prices, this is beneficial. There are many sources for the information, when you find a source to track get oil quotes, you can get started. Oil quotes will be found under commodities, and youll see a price chart plus the futures price per barrel. There are two oil prices that youll see.
West Texas Intermediate (Texas Light Sweet)-this type of crude oil is used as an oil marker (benchmark) mainly in the United States.
Brent Crude-this type of oil is used as an oil marker in Europe and the OPEC basket.
As far as trying to make money by speculating on the price of oil, it is risky. That means that since oil prices are infamously volatile and many an experienced trader have been humbled by the fast pace of this commodity. The risk of loosing money also includes great opportunities to make money with oil.
Establishing a value of oil & gas net assets for re-sale is based on the following:
Present cash flows
Proved un-developed reserves
Recoverable reserves expectations
The best assurance of the net asset value is established when a licensed petroleum or professional engineer performs an appraisal. Appraisals that are acceptable during a bank review to determine value, and would make an exit strategy easily accomplished in the marketplace when selling oil & gas production. When electing to take a company public as an exit strategy to provide liquidity for investors appraisals are also acceptable .
One way to take advantage of the many federal tax write-offs is investing in direct participation 506 Reg-D private placement oil & gas investment offerings offered by small oil companies or directly with oil & gas operators. There are many federal tax-write offs and it is good business to take them if you want to lower your gross income for tax purposes.
Making money can be done in a well thought-out, and fully diversified program when you get into oil.
When investing in oil and gas there are many aspects of the industry to consider before determining a safe investment. Three of the main features are:
1) Your investment acumen.
2) Investment objectives.
3) What type of investment vehicle?
1) Investment Acumen: Investment acumen means insight or judgment. In other words, as an investor you need to have the knowledge to be able to ask the right questions and understand what is the right answer. That way, you will be able to make much better investment decisions. Safe decisions to invest or who to invest with are the first prerequisite to profitable investing.
2) Investment Objectives: As we stated earlier, your investment goals, or potential returns, accompanied with the appropriate amount of risk can only be determined by you, the investor.
As an example, if you are interested in analyzing the potential loss of your investment funds, you would be much better off investing in blue chip major oil company stocks. However, if you could accept a larger degree of risk, or in other words, potential loss of these investment funds, you may consider investing in projects that offer a higher rate of return. This leads us into our next category.
3) Investment Vehicles: These vehicles may be stock, an investment fund, a drilling fund, private placement, commodities trading, or some combination of all of the above.
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