Oil: A drop in value does not mean it is a bargain – Charles Schwab

Investors should proceed with extreme caution when purchasing oil-linked ETPs, Emily Doak from Charles Schwab apprises.

Key quotes

“For anyone not willing and able to take delivery, negative prices did not create an attractive, arbitrage opportunity.”  

“Investors should know the benchmark (WTI, Brent, or other type of oil), the term structure (front-month, longer-dated, or some combination), and the process used to roll contracts as they approach expiration.”  

“Although volatility is currently impacting oil markets, investors should be aware that other commodity markets could also be at risk for Covid-19 disruptions.”