How to Buy Oil Stocks Directly From the Oil Companies

Petroleum can often be purchased directly from oil companies.

Investors seeking to buy crude oil--the hydrocarbon-rich mineral used as the basis for a number of fuels--can either purchase crude through a broker or by contracting directly with the companies responsible for extracting the oil.

Features

When oil is extracted from the ground, much of it is immediately available for purchase near the point of extraction on the so-called "spot market." Much of this oil is purchased by brokers, who will usually transport it and flip it to another buyer. Oil companies should be contacted about the availability of their stocks.

Types

In addition to purchasing oil at the point of production, oil stocks can also be purchased in advance from oil companies in the form of contracts available on commodities exchanges. While some contracts are made available through brokers, others are listed directly by the companies themselves.

Considerations

Much oil has already been effectively sold long before it has been taken out of the ground, due to the use of long-term contracts. Similar to the contracts sold on an exchange, these contracts guarantee that one party, the producer, will provide a set amount amount of oil to buyers by a certain time. Unless the buyer resells the oil, it will not be available on the open market.

References

• "The International Crude Oil Handbook 2009"; Energy Intelligence Group; 2009
• MSN Money: How To Buy Into The Oil Boom

Resources

• CNN: Commodities - Latest Trading Prices