Forget Buying USO Stock: Buy This Oil Stock Instead
Oil prices have gone berserk in the past week. The May contract for West Texas Intermediate, which is the main oil price benchmark, plunged into negative territory on Monday. Like a game of musical chairs, oil price speculators were in a mad dash to unload oil futures contracts before they expired and had to take physical delivery of the oil. With storage space running out, they needed to pay a high price to exit these failed bets that oil would rebound.
Oil would rally from that bottom as speculators placed new wagers that the industry would solve its looming storage crisis with additional production cuts. One way some traders are gambling on that recovery is through oil price ETFs like the U.S. Oil Fund (NYSEMKT: USO). However, they're playing a dangerous game, since that vehicle could go bust if oil futures crater again.
With that and the oil ETF's other issues in mind, investors should avoid using it as a means to profit from a potential oil market recovery. Instead, a better bet would be to buy a top-notch oil producer like ConocoPhillips (NYSE: COP). Here's why it's a better option than the U.S. Oil Fund.
Source Fool.com
