Timing Indicators for Structural Positions in Crude Oil Futures Contracts

Should an investor enter into long-term positions in oil futures contracts? In answering this question, this paper covers the following three considerations: (1) whether crude oil inventories are scarce or not; (2) how to avoid the risk of oil prices crashing; and (3) the use of financial assets for diversification purposes. The paper concludes that positions in crude oil futures contracts should (a) not only be actively timed, but (b) must also be twinned with financial assets in order to hedge against both the possibility of deflationary conditions and/or periodic oil-market-share price wars.