I believe that one of the most compelling case of long-term trade is the long position on oil. Fundamentally, it seems quite clear that demands is going to grow in the future as emerging markets start using more and more energy, whereas supply is likely to be limited as the resource are vanishing or at least are more expensive to extract.
I am aware that the oil prices are fluctuating a lot and that now might not be a good time to enter the trade, but my question is more abstract. Assume that oil reaches a price that can be considered interesting to get in. I assume I want to make a long-term trade, i.e. over 5 to 10 years. I can see essentially 3 possibilities:
- Buy physical oil and store it
- Buy oil futures and carry it
- Buy oil firms' stocks
The first alternative is costly and requires quite an infrastructure for storage. The seconds will suffer from the contango situation and the cost of rolling. The third one suffers from the equity risk of the underlying firms which is not related to the oil prices per say.
Is there another implementation I didn't think about which could be a good way to get exposure to energy prices.