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Play Peak Oil with this ETF

My Latest Oil ETF Recommendation

Written by Luke Burgess
Posted May 3, 2010

The arguments against peak oil have been all but silenced.

And those who were once labeled conspiracy theorists and liars — including Energy and Capital — are now being taken seriously.

Oil's climb from less than $20 per barrel at the end of 2001 has largely been driven by the failure of producers to generate new supplies fast enough to keep pace with rising demand, especially in China and India.

This will be a continuing trend.

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In its most recent monthly Oil Market Report, the IEA said that oil demand would hit a record high this year. The report stated:

Crude oil futures hit 18‐month highs in early April, with expectations for an accelerating economic recovery, spurring financial and commodity markets, and stronger oil demand ahead.

The world currently burns over 31 billion barrels of oil a year. That's a lot.

(With the gasoline produced from 31 billion barrels of oil, you could drive a Ford Explorer, getting about 20 mpg, around the planet's circumference more than 50 million times!)

But global oil consumption is only expected to increase from here on out...

According to the Energy Information Administration, world oil demand is set to rise from 85 million barrels per day in 2010 to 118 million barrels per day in 2030.

If global oil production hasn't already hit the plateau, it soon will. Once that happens, we're in for sharp increases that will send oil prices into the stratosphere.

What I'm trying to get at here is this: Don't lose a second of sleep over short-term corrections in oil prices.

Oil prices have risen 127% since January 2009. And they're only going higher.

If anything, we should be thankful that the market gods have granted us another chance to add to our positions. In short... Go long oil.

And here's one great way to do it...

How to Triple Your Peak Oil Profits

Buy the Direxion Daily Energy Bull 3x Shares ETF (NYSE: ERX):

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The Direxion Daily Energy Bull 3x Shares ETF is tripled leveraged against the Russell 1000 Energy Index.

The Russell 1000 Energy Index is a subset of the Russell 1000 Index. This index measures the performance of 76 large and mid-cap U.S. energy companies.

It includes energy-related businesses, such as oil companies involved in the exploration, production, servicing, drilling, and refining processes. The index also includes companies primarily involved in the production and mining of coal and other fuels used in the generation of consumable energy; as well as gas distribution, gas pipeline, and other such companies.

The top ten holdings are as follows:

  • Exxon Mobil (NYSE: XOM)
  • Chevron (NYSE: CVX)
  • Schlumberger (NYSE: SLB)
  • ConocoPhillips (NYSE: COP)
  • Occidental Petroleum (NYSE: OXY)
  • Anadarko Petroleum (NYSE: APC)
  • Apache (NYSE: APA)
  • Devon Energy (NYSE: DVN)
  • XTO Energy (NYSE: XTO)
  • Halliburton (NYSE: HAL)

The inclusion of companies in this index is based on a combination of their primary lines of business and market capitalizations.

The Russell 1000 Energy Index is constructed to provide a comprehensive and unbiased barometer for the energy sector.

It's completely reconstituted annually to ensure new and growing equities are reflected; it is maintained regularly to verify that companies continue to remain financially focused in their energy-related business lines.

The Direxion Daily Energy Bull 3x Shares ETF is a great tool for investors looking to leverage rising oil prices.

Still, investors can get even more leverage — and much higher profit potential — from my colleague Ian Cooper's latest stock discovery. This opportunity is already being touted as the #1 oil play in the country.

Ian recently said of this play: "Since being upgraded this stock hit a high of nearly $15 — including a 233% gain in just over one year. We cashed out with a gain of over 103%... and now we're ready to take our second round of profits."

You can learn more about how to get started investing in this stock today.

Good Investing,

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Luke Burgess
Editor, Energy and Capital
Investment Director, Hard Money Millionaire

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