Last year, energy prices have become a top topic in almost all news publications. The unstable geopolitical situation and supply disruption, as well as the growing demand in Asian countries, led to a sharp increase in prices. Those who have managed to invest in various types of energy products have received significant profits. By studying energies quotes, you can see that this trend continues, which means it’s time to think about investing in energy commodities.Invest in Energies to Multiply Your Profit During a Price Spike
What Types of Energy Sources Are Best to Invest in
Energy investments offer a wide range of assets, from firewood to nuclear power. However, not all energy commodities are equally in demand on the market, which means that the expected profit will also vary:
- Oil — the stability of demand for oil could make it an ideal investment option. However, it is offset by the high volatility of this asset, which carries significant risks if the percentage of investments in oil and shares of oil companies in your portfolio are high, and its price falls.
- Gas investments have recently become one of the most attractive due to the fact that supply contracts have shown sharp growth dynamics, and this trend will continue in the near future.
- Bioethanol — ethanol is now actively used in internal combustion engines of cars, making exhaust gasses cleaner. There are debates about the environmental friendliness of producing this type of energy, but many countries have relied on it in the fight against carbon dioxide emissions. They invest heavily in the development of infrastructure for its production.
- Coal — the profitability of investments in the coal industry in the long term is doubtful because many progressive countries are abandoning coal energy altogether. However, not all countries have done this yet, so if you wish, you can invest in shares of coal companies as well.
- The green energy sector is currently considered “overheated,” and therefore, the shares of companies involved in it, as well as ETF, are falling in price. However, the great mission of green energy stimulates further investments in this sector.
- Investment in nuclear power — the debate over the advisability of nuclear power has been going on for a long time, but not all countries relying on it are ready to abandon nuclear power projects. In addition, it is emphasized that nuclear energy can become a kind of bridge during the transition from dirty to clean energy. Therefore, in the near future, its importance will remain.
Is It Necessary to Own Energy Sources to Profit from Them?
To invest in energies, you don’t need to be an owner of wells, deposits, nuclear power plants, raw material processing plants, etc. The profit can be earned through:
- the acquisition of shares in companies related to the energy sector
- derivatives trading, such as ETFs, CFDs, options, and futures
Such trading in securities allows you to make a profit without imposing on you any obligations for the extraction and processing of raw materials.
Energy investments are among the most profitable. But remember that some of their types are highly volatile since the price is largely determined by the geopolitical situation in the world. Therefore, be sure to hedge such investments with more stable assets.