As oil prices plunge, I want to profit from the next spike. Here’s how

Buy jerry cans and fill them while you can. You won’t want to be caught out by the great oil shortage of 2016. Maybe that is exaggerating a little, but when you start hearing people talking about the world being ‘awash’ with oil, and read of oil companies slashing exploration and towing rigs to be laid up in the Moray Firth, you have to wonder if an oil crunch can be far behind. Someone is going to make a fortune when the balance between supply and demand flips and prices rocket again.

It is easy to fancy that it could be you. But being a contrarian doesn’t always work out. Only misery awaited those who thought that when bank shares halved at the end of 2007 it must be a great buying opportunity. I would love to say I wasn’t one of them. It is not much consolation to be able to say you only lost 90 per cent of your money, while those who bought at the peak lost 95 per cent.

So is now the time to make a fortune from a depressed oil industry, and how do you do it? It is so often the same for small investors. You vaguely know what you want to do, which is to buy some oil at today’s price in the hope that you can sell next year at a higher price. But how do you get your hands on oil futures?

You can do so via things called Exchange Traded Funds, which invest in oil futures for you. You can certainly make money when the price spikes. Had you put $100 in the ETFS Commodities Securities Crude Oil fund in 2007, for example, you would have had $200 a year later.