How to Invest in Rising Oil Prices

The U.S. Energy Department says the price of oil will average about $93 a barrel in 2011.

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For the less sophisticated investor, Lydon recommends ETFs that simply track indexes of oil production and services companies, such as iShares Dow Jones U.S. Oil & Gas Exploration & Production ETF (IEO), PowerShares Dynamic Oil & Gas Services (PXJ), and SPDR S&P Oil & Gas Equipment & Services ETF (XES). These ETFs invest in a handful of companies like Halliburton, Schlumberger, and Transocean. "Now with oil above $90 a barrel, and the global demand still strong, earnings should be very strong with these companies," Lydon says.

Corrected on 1/20/2011: In a previous version of this story the country Colombia was misspelled.