How to invest in oil

Some say the worst of the economic downturn may be behind us. They say global trade has troughed, while manufacturing and housing stocks are as depleted as they will get. So it seems a good time to think about investing in oil.

After all, there is no arguing that the world is still dependent on oil to fuel growth.

This week future dated Brent climbed above $60 for the first time since November.

Fund managers certainly seem to be looking more favourably at the energy sector and it is now the second most popular sector among institutional investors.

Alistair Syme at Nomura reckons the price of oil is going to rise above inflation over the next two years, to $75 in 2011. He says share prices are not yet reflecting this.

Keith Morris, analyst at Evolution, cautions that the oil market is particularly difficult to follow at the moment as news on demand and supply is out of date as soon as it is published. But morris sees oil averaging at around $50 dollars this year and $70 thereafter.

With even the most cautious analyst expecting the oil price to be higher in 2010 and the prospect of supply starting to tail off from 2013, you might be feeling like you too want to jump on this bandwagon.

Unless you’ve got a very large garden and a fantastic insurance policy, you probably don’t want to stockpile drums of oil.

Full article here: http://www.citywire.co.uk/personal/-/co … ;ea=116566