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5 Best Oil ETFs to Buy in Q1 2025
Oil has powered the world for most of the last two centuries, and as a result, it has been one of the most popular commodities to invest in for many a year. On this page, we list the top oil ETFs and explain what they have to offer for investors. Scroll down to get started.
What are the top oil ETFs to buy?
Copy link to sectionOur financial analysts have been closely studying the oil market, and they have concluded that the five funds below are your top oil ETF options. Check them out below.
| # | ETF ticker | ETF name | Learn more |
|---|---|---|---|
| 1 | USO | United States Oil Fund LP | Learn more > |
| 2 | UCO | ProShares Ultra Bloomberg Crude Oil | Learn more > |
| 3 | OILK | ProShares K-1 Free Crude Oil Strategy ETF | Learn more > |
| 4 | DBO | Invesco DB Oil Fund | Learn more > |
| 5 | SCO | ProShares UltraShort Bloomberg Crude Oil | Learn more > |
1. United States Oil Fund LP (NYSEARCA: USO)
Copy link to section- Current price: $78.75
- AUM: $1.24 billion
- Annual expense ratio: 0.70%
- YTD performance: 18.15%
- Annual dividend yield: N/A
The United States Oil Fund LP seeks to reflect the daily changes in the price of light sweet crude oil delivered to Cushing, Oklahoma. USO achieves this by investing in futures contracts on light sweet crude oil and other petroleum-based fuels. The ETF aims for its net asset value (NAV) to track the daily changes in the spot price of oil, making it a direct play on crude oil prices.
USO’s strategy involves investing in futures contracts and swaps, providing investors with exposure to the oil market without needing to handle physical commodities. Its portfolio includes significant positions in WTI crude futures and total return swaps, with cash holdings to manage liquidity and collateral requirements.
With oil prices expected to remain supported due to OPEC+ supply cuts and peak summer demand, USO is well-positioned for those looking to capitalize on potential oil price gains.
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2. ProShares Ultra Bloomberg Crude Oil (NYSEARCA: UCO)
Copy link to section- Current price: $33.15
- AUM: $530.54 million
- Annual expense ratio: 0.95%
- YTD performance: 27.01%
- Annual dividend yield: N/A
ProShares Ultra Bloomberg Crude Oil offers a unique opportunity for traders looking to capitalize on short-term oil price movements with its leveraged exposure. The ETF seeks to achieve twice the daily performance of the Bloomberg Commodity Balanced WTI Crude Oil Index, making it a high-risk, high-reward investment.
UCO’s leveraged strategy means it is best suited for those seeking to amplify short-term gains from movements in crude oil prices. The fund does not track the spot price of WTI crude oil directly, which can result in significant performance deviations from the spot price due to the effects of compounding and market volatility. Therefore, investors should be cautious about holding UCO for extended periods.
The portfolio of UCO consists of a blend of derivatives, including swap agreements with major financial institutions and futures contracts with various expiration dates.
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3. ProShares K-1 Free Crude Oil Strategy ETF (BATS: OILK)
Copy link to section- Current price: $48.05
- AUM: $125.43 million
- Annual expense ratio: 0.71%
- YTD performance: 14.12%
- Annual dividend yield: 5.29
Unlike traditional oil ETFs, the ProShares K-1 Free Crude Oil Strategy ETF operates as a K-1 free fund, meaning it pays out most of its profits in distributions.
This characteristic, akin to real estate investment trusts (REITs), provides investors with potential income through dividends, making OILK an appealing choice for those seeking direct exposure to oil prices with a dividend component.
OILK’s strategy revolves around investing in WTI crude oil futures, leveraging a blend of derivatives and financial instruments to mirror the Bloomberg Commodity Balanced WTI Crude Oil Index’s performance.
Despite facing NAV decay due to the frequent rolling of futures contracts to avoid physical delivery, OILK offers an accessible way to participate in oil market movements. Investors should note the fluctuating nature of its distributions, reflecting the fund’s profit or loss from futures trading activities.
This ETF suits investors interested in potential income from oil price movements while mitigating the risks associated with direct commodity investments.
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4. Invesco DB Oil Fund (NYSEARCA: DBO)
Copy link to section- Current price: $15.78
- AUM: $237.59 million
- Annual expense ratio: 0.75%
- YTD performance: 13.44%
- Annual dividend yield: 4.05%
Invesco DB Oil Fund stands out for its structured approach to tracking the DBIQ Optimum Yield Crude Oil Index Excess Return. Unlike traditional ETFs, DBO includes interest income from US Treasury securities and money market income in its returns calculation, offering a blend of oil market exposure and fixed income stability.
This unique feature appeals to investors seeking a balanced approach to commodity investments with a focus on consistent returns and lower volatility. DBO’s investment strategy revolves around futures contracts on light sweet crude oil, providing direct exposure to oil price movements while managing liquidity through a mix of financial instruments.
The fund’s annual rebalancing in November ensures alignment with market changes, maintaining relevance in dynamic oil market conditions. Investors interested in both commodity exposure and income generation through dividends may find DBO’s dual focus on oil futures and fixed income assets particularly appealing in today’s market environment.
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5. ProShares UltraShort Bloomberg Crude Oil (NYSEARCA: SCO)
Copy link to section- Current price: $15.72
- AUM: $178.18 million
- Annual expense ratio: 0.95%
- YTD performance: -24.75%
- Annual dividend yield: N/A
ProShares UltraShort Bloomberg Crude Oil provides a distinct investment strategy for traders looking to profit from inverse movements in crude oil prices. This ETF seeks daily results that correspond to twice the inverse (-2x) performance of the Bloomberg Commodity Balanced WTI Crude Oil Index, making it a powerful tool for capitalizing on oil price declines.
SCO’s investment approach is tailored for short-term speculative purposes rather than long-term holdings, making it suitable for investors looking to hedge against potential downturns in oil prices or capitalize on market volatility.
The fund’s strategy involves a laddered futures approach, strategically positioning short positions across different contract expirations to manage risks associated with futures roll-overs effectively. As such, SCO serves as a potent instrument for active traders seeking to navigate dynamic oil market conditions with enhanced leverage.
Investors considering SCO should note its high-risk profile and the potential for amplified returns during periods of significant oil price declines. However, due to its leveraged nature, SCO is not recommended for buy-and-hold strategies, emphasizing its role as a tactical tool for short-term market plays.
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Where to buy the best oil ETFs
Copy link to sectionYou can purchase ETFs in the exact same way you purchase oil stocks: through a stockbroker. These are regulated online platforms that allow you to purchase a wide variety of assets, including oil ETFs. Check out some of our top picks below; their low fees and high-quality interfaces make them stand out from the crowd.
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What is an oil ETF?
Copy link to sectionAn oil exchange-traded fund (ETF) is a fund that trades on the stock exchange, just like a regular stock. The ETF can be one of two things. It can be a commodity ETF that tracks the performance of key global oil price benchmarks, or it can be a securities ETF that consists of a wide variety of publicly traded companies that engaged in the oil and gas industry.
Some oil ETFs are passively managed, which means they track the performance of a set index without input from a fund manager. By contrast, actively managed ETFs have a fund manager taking charge who makes decisions about the contents of the ETF with the aim of providing investors with enhanced returns.
Since the energy sector can be volatile, oil ETFs provide a more stable investment than relying on one or two of the best oil stocks. Rather than betting all of your capital on the performance of a single business, this capital is spread out over numerous companies within the oil and gas sector, often with varied sources of revenue and based in different locations around the world.
Are oil ETFs a good investment?
Copy link to sectionThe benefit of an ETF is that it gives you exposure to an entire industry rather than a single company. As a result, the performance of your investment is tied much more closely to the overall oil market than if you were to hold shares in an individual oil company.
Investing in oil has been one of the most popular practices for humans since the dawn of the industrial age. Its integral role in powering the world is unquestionable, and even today, despite mounting scrutiny on fossil fuels by environmentalists, the global oil & gas exploration & production industry stands at a huge $2.1T – larger than all metals markets combined.
The IEA Oil Market Report projects this figure to increase in the coming decade despite the growth and increasing competitiveness of the renewable energy sector. Given the vast growth prospects and stable base of demand for oil, it is one of the top commodities to invest in and a strong option for any type of investor.
Methodology: How we choose the best oil ETFs
Copy link to sectionAt Invezz, we are dedicated to helping investors make informed decisions by providing authoritative, accessible, and engaging advice and recommendations. Our curated section of the best Exchange-Traded Funds (ETFs) is carefully selected by our team of experienced market analysts and reviewed by a sub-editor. This methodology outlines the rigorous process we follow to ensure our ETF recommendations are up-to-date, reliable, and insightful.
- Analyst research & recommendations: Our seasoned market analysts use their in-depth sector knowledge to identify ETFs with strong potential, ensuring they meet high standards of performance, liquidity, and market potential.
- ETF evaluation: We evaluate ETFs based on their underlying assets, historical performance, expense ratios, and tracking accuracy, alongside macroeconomic factors and sector trends.
- Fund performance reports: We assess ETFs through the latest performance reports, analyzing key metrics like returns, volatility, expense ratios, and assets under management (AUM).
- Sector analysis and external recommendations: Our detailed sector analysis, combined with recommendations from reputable sources like Barron’s and Zacks, provides an additional layer of validation for our selections.
- Quarterly review & refresh: We update our curated ETF list quarterly, re-evaluating each ETF based on the latest reports, industry developments, and market conditions to ensure our recommendations reflect the most current information available.
