The small investor is able to invest in a variety of oil stocks. Oil companies drill for oil, refine oil into fuel, like gasoline, and then sell the products to the consumers. The larger companies are fully integrated, and the smaller ones find the oil and gas and refine it.

You should know some facts about crude oil before you begin to invest, such as exactly what it is. It is a sticky, dark liquid, classified as hydrocarbon. That is, it contains carbon and hydrogen. It is highly flammable and is burned to create energy. Derived from this is an excellent source of fuel.

The trading of these stocks provides liquidity, as it is very actively traded all over the world. It trades in barrels, 1,000 at a time. Each barrel contains 42 gallons. Light sweet crude oil is low in sulfur content and has high value products enabling companies to produce gasoline, heating fuels, jet and diesel fuels.

There are many countries today producing oil, but among the top ten are: Russia, United States, Mexico, Saudi Arabia, Iran, Norway, Kuwait, Venezuela, Canada, and China. Russia consumes much less than it produces, and in contrast the United States consumes a third more than it produces.

Once only for the wealthy investor, these days the average and small investor has the chance to trade crude oil, due to new technology. NYMEX requires only a 5% investment or less. This allows for others, less wealthy, to invest in this exciting market.

Now that you know a little bit about crude oil, you need an account with a brokerage firm or on line. Do your research on which companies you have interest in, study their charts and analysis, as well as their annual reports, read the financial newspapers, and make a decision on just how much you intend to invest in this risky trading business. This will help in your decision about how many shares or barrels you intend to invest in. If you are new at this, you may need the assistance of a financial advisor. He or she is trained to know the market and advise you accordingly. And when you are ready, have an exciting time investing in oil stocks.

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This entry was posted on Monday, March 1st, 2010 at 2:21 am and is filed under Investing.