This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Best Way to Short Oil

With so many people so bullish about oil, it might be a good time to think about shorting it.

After all, at close to $100 a barrel, the price of crude has nearly doubled this year without a significant pullback.

There are plenty of people, like Fadel Gheit, managing director of oil and gas research at New York financial services firm Oppenheimer & Co., who will tell you oil prices have nothing to do with fundamentals . "Current fundamentals don't support $60, let alone $90," he says. "Demand hasn't increased significantly. What's changed in the world this year?"

Even some people who think current prices are justified are looking for a technical correction. Phil Flynn, senior energy market analyst at Chicago's Alaron Trading, thinks oil's rally has been driven by fundamental reasons, like a weak dollar, an unseasonal decline in inventories and an increase demand for oil in India and China.

Still, he thinks the market is due for a 10% to 15% pullback.

The traditional way to trade oil is through a futures account. But going short via the futures market is expensive -- and risky. Chances are, your stock broker doesn't trade them and you'll have to pony up a sizeable amount of money to open up a new account with a new firm.

Exchange-traded products that track oil are an alternative worth considering. There are now five of them, and, in theory, they should all be as easy to sell short as stocks, borrowing the shares and selling them in the hopes of buying them back at a cheaper price when it's time to repay the loan.

But as I wrote here in August, it's not as easy to short exchange-traded products as you might think. While all of these products are relatively new, four are relatively thinly traded, meaning they may be hard to borrow.

1 of 4

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 17,356.87 +288.00 1.69%
S&P 500 2,012.89 +40.15 2.04%
NASDAQ 4,644.3120 +96.4780 2.12%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs