Can you trade/speculate on crude oil prices, in the same way you ';speculate'; on grains, etc?

Yes, crude oil is a commodity, just like the grains, and trades in 1,000 bbl contracts on the NYMEX. A mini contract is also available.





If you have not traded futures or commodities before, it would be difficult to explain why the average person can't ';speculate'; on commodities. It has to do with leverage and margin. But a mere $1/bbl price fluctuation could cause a margin call in your account, forcing you to sell out or invest more money. This is not a ';Buy and Hold'; investment. The purpose of the futures contract is to hedge, but it can certainly be used to speculate also. But without the underlying oil (the other half of the equation), and just the futures contract, you carry enormous risk.





The second part of your question or rather statement, that oil prices are guaranteed to rise is unreasonable, irrational, and flat wrong. There are no guarantees.





I bet my entire future on the oil industry, and graduated as a Petroleum Engineer in 1979, in the middle of a Boom, then watched in the 1980's as it went bust and I lost my career, along with half my friends. This was because the price of oil fell to $10 per barrel in 1985. But it came back, and they said that would never happen again.





Then again in 1995 or 1998, it happened again; oil at $10/bbl.





Never say never.





Okay, maybe it won't go to $10/bbl, but if a $1 price fluctuation can cause a margin call, and a $2 price fluctuation can wipe out your account, what will a $10 or $20 or $30 or $40 price fluctuation do? Prices can certainly decline by half and still be in an uptrend.





You better rethink the equation.Can you trade/speculate on crude oil prices, in the same way you ';speculate'; on grains, etc?
Yes. Crude oil futures are traded I think on the New York Mercantile Exchange (NYMEX).Can you trade/speculate on crude oil prices, in the same way you ';speculate'; on grains, etc?
Yes you can, you can trade crude futures and options on the NYMEX (New York Mercantile Exchange) or the IPE (International Petroleum Exchange of London).





Crude futures trade in contracts that control 1000 bbl of crude oil. The reason most people don't trade oil futures is because of the high leverage.





When you trade futures, you put down a good faith deposit called margin (unlike margin in stocks). The margin is only a fraction of the value of the futures contract. The margin requirements can increase or decrease based on volatility.





When you buy a stock, if you bought 100 shares of the company and the shares lost $1, you'd loose $100. But because futures are highly leveraged, you have potential for unlimited losses. Let's say you're long (bought) 25 Dec. 2006 Crude futures contracts. If crude dropped $1, you'd lose $1/bbl. One futures contract controls 1000 bbls. so you'd lose $1000 per contract. Multiply that by 25 contracts and you've lost $25,000. See what I mean? And the margin for crude (under normal circumstances) is probably around $2500 per contract. Your total margin therefore would be $25,000. Now let's say instead of $1, crude drops $5. You lost $5000 per contract, times 25 contracts, you lost a total of $125,000 on a $25,000 initial margin. Which means, not only did you lose the entire margin, you need to cought up another $100k to cover your losses.





Futures (derivatives) are the riskiest investments there are and if you're going to trade them, you better know what you're doing and you need to have a very high risk tolerance level.
It doesn't matter what market you trade. It depends on the strategy you use. Also, price is not always as predictable as you think.
Sure you can. But there are no ';sure things'; in investing. Absolutely, the news in the Middle East can affect prices, but they already have. How do you know if they will affect them MORE? Its not as straightforward as it may seem.