Oil ETFs

I believe oil is priced below its sustainable price.  Beyond buying a few barrels to store in my flat, how can I invest in it?  All the individual companies I've looked at are not at low enough valuations for me catch a falling knife.  What about ETFs?

Oil commodity tracker ETFs, such as USO, are synthetic, since its hard to physically store  oil.  They suffer from large tracking error when the market is in contago, as they have to regularly roll over their (cheaper) expiring near term futures into longer term (expensive) ones:

(Source - bidnessetc.com - Seeking Exposure to Oil and Gas prices?  Here is what you should not do.)

ETF tracking Oil companies are better.  But most common ones, XLE or VDE, are heavily weighted towards large caps (with 22% ExxonMobil 22%, and 12% Chevron).  Looking at Jim Chanos' recent short position in XOM, I'm hesitant to bet against him.

XOP, tracking the "SPDR S&P 500 Oil and Gas exploration & production index" may be a better choice to track the WTI.   It is split by equal weightings into 80 companies, each less than 2%.  Holdings are 100% US based, around 77% are E&P.  They are all small E&P companies such as Laredo Petroleum or Parsely.  The top ten holdings make up 15%.  The risk here is that a large number of these companies go belly up -  based on 1-2m bbl/d oversupply on the global markets, US shale production needs to drop by 10-20%.

IEO, the "iShares U.S. Oil & Gas Exploration & Production ETF" is another option, which holds mostly mid-sized companies such as EOG or Andarko, with 73% E&P, also 100% US based.  The top ten holdings make up 60%.  IEO behaves as a lower beta version of XOP - they both track WTI, but IEO rises and falls less.

I'm thinking of taking a third of my planned position by buying IEO at the WTI support of $44 - too bad I missed Friday night (morning in US). Later buy another third if WTI drops below $40 - hopefully by then, valuations are down enough for me to buy individual stocks.  And then I may swap my initial IEO position into a higher risk XOP one.