Oil is a perishable natural resource. There are a few countries that have a big reserve of oil. The amount of oil in different oil rich countries and the supply of this crude oil drive the world economy to some extent. There has been a hue and cry regarding the supply of oil and thee is the fear of its perishing has already begun to affect the world’s markets to some extent.

A wonderful way to invest in oil or oil well investments is by means of an oil based exchange traded fund or ETF. These funds can be bought and sold as normal shares and stocks. The oil exchange trade funds try to directly copy the price of crude oil. It is not the case that the manager goes out and buys crude oil and stores them up in a warehouse. Neither does the manager go out and invest the funds in oil related stocks. In oil and gas investments the price replication is achieved by means of the buying of the futures contracts, options and futures contracts in crude oil. The derivative contracts are of a derivative nature, exchange traded, and they allow the fund manager to closely imitate the market price of oil.

Most of the ETFs in oil and gas investing are only available for buying and selling in big contract sizes and so they are not too attractive to the small investor. The commodities markets have been booming in recent years and the demand outstrips supply. The booming Asian markets of India and China are leading to the fuelling of these changes.