There simply is no better time to invest in oil companies. Anybody who has followed the oil industry in the past eighteen months must have learnt a few valuable lessons.

First, oil prices hit a record high of a bout 150 dollars per barrel. Then oil prices crashed to an all time low of just about 35 dollars per barrel. Now, oil prices seem to be on the path of recovery and somehow, it has continued to rise and rise. At present, oil prices hover between 68 dollars and 73 dollars per barrel.

Naturally, the rice in oil and gas prices also go with a corresponding rise in the price of petroleum products as well. It is therefore safe to draw two very realistic conclusions.

1. Oil Companies have periods of highs and lows.

2. There is money to be made in the oil business.

With these conclusions in mind, we have to understand that the fundamental thing here is actually timing. If you really want to profit from your investment in oil companies, you just have to know when to invest. If you had bought crude oil when it was just about 35 dollars per barrel, you would have doubled your money by now. And we are talking about a period of just slightly over one year.

Another important thing is the form your investment in oil will take. Not every investor has enough liquid cash to buy crude oil and wait for the price to go up. In any case, business is all about turnover and not about stockpiling products and hoping for a massive rise in the price of that product.

For this reason, investors in oil need to have the right information before they take plunge. There are quite a number of compelling reasons for investing in oil companies.

Oil is a very valuable commodity. The market for oil and petro-chemical products will always be there. Therefore, this places it in the category of a very sound investment.

Again, oil has a limited supply. This is simple Economics at work here. If a commodity is relatively scarce, the price is liable to be relatively high as well.

Another very important point is that crude oil and natural gas are very sensitive commodities. If militants attack oil installations in Nigeria's Niger Delta, for instance, there will be a rise in crude oil prices.

Now, if you know all these, then you can figure out when to invest in oil companies and when to refrain from investing in oil companies.

So, what form should your investment take? This is the easy part. You can buy oil company stocks at the right time and you will profit from your investment. You can also invest directly as a minor player in the industry. For instance, if you can afford it, set up a gas station and you have become an oil industry investor in a relatively minor capacity.

You can also have a profitable sideline dealing in chemicals and petro-chemical products.

Whichever option you choose, understand that there is money to be made in this business. But you can also lose money in this business if you are not careful. Therefore, keep your eyes wide open and get all the relevant information before you invest in oil companies. This is the sensible thing to do.

Learn more about this author, Emmanuel Osondu.
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