Lux Investing
Question about investing in Brent crude oil?
I'm thinking of investing long time in Brent crude oil certificates such as RICI Enhanced Brent Crude Oil Quanto Open End. These appear to be a simple way of investing in the oil price. It's predicted that North Sea oil will run out in the next 20 years. This may be a strange question but what is likely to happen to the certificate price? Will the price rise and then crash because there is simply no oil left to sell or what exactly happens when you invest in a commodity which runs out? Please note that unless something very strange happens I expect the world oil price to rise. The question is about Brent crude, not world oil as a whole.
Public Comments
- I am not sure it will run out in 20 years. What happens is that it becomes uneconomical to extract. Brent oil is different to most other crudes. I think it is a lot lighter and does not have a smany uses (or by-products) as heaavier crude like West Texas. It also depends on the availability of other types of oil (and the demand). Usuaally a resource becomes unviable if it starts to cost more to extract than to refine and sell (i.e. you have to drill deeper and deeper). Before that stage the industries using Brent would have switched to some other oil or product.By 20 years I should hope we will have many nuclear plants providing some alternative and would be well on the way to using some alternative energy source. I expweect it will be more like 200 years.
