Did Investors Make Money from the Oil Crash?

Oil prices have rallied strongly since their low point in April 2020 and gold had a great year, but did opportunistic ETF buyers make a killing? 

James Gard 19 January, 2021 | 10:06AM
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Oil drilling

Exchange traded commodities (ETCs) are a popular and low-cost way of gaining exposure to the movements of oil, gold and other precious metals without the hassle and expense owning the product itself. The appeal of such funds was apparent in 2020, a volatile year which saw oil plunge and gold soar. 

What Happened to Oil in 2020? 

The collapse in oil prices in April 2020 saw the commodity's price move into negative territory for the first time. It was largely sparked by a drop-off in car and air travel as a result of the Covid-19 crisis. At the time, Morningstar analyst Kenneth Lamont looked at the phenomenon of negative oil prices, cautioning that investors keen to leap in to buy “cheap” oil via ETCs could come a cropper because of technical reasons (for more on “rolling costs” and “contango”, the article is here).

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About Author

James Gard  is content editor for Morningstar.co.uk