Investors confident that the oil price will rise in 2009

Investors are confident in their outlook for the price of oil, according to research from Barclays Stockbrokers. Almost two thirds (62%) of investors would invest in oil as they believe its price will rise, and a further one in eight (13%) would invest in oil because of the diversity it offers to their portfolio. With 6% saying they would invest in oil to hedge against inflation, the research suggests that investment in oil can serve a board range of purposes.

Barbara-Ann King, Head of Investment at Barclays Stockbrokers, says: "When it comes to commodities, oil remains one of the most sought after substances in the world. It is intrinsically linked to the economies of both the developed and emerging markets and can be both an indicator for economic health and a driver of it. Like gold, oil traditionally has a low correlation with equities, meaning oil related investments in a portfolio can provide a healthy element of diversification. Similarly, oil and companies linked to oil have a history of outperforming most equity benchmarks during downturns when stock markets are perceived as being weak; however, this may not be in the case in the future. Oil, like gold, is also sometimes seen as a good candidate for a hedge against inflation".

At the end of March, crude oil broke the psychologically important $50 barrier, continuing on a bull run that started on 16th February. One factor influencing this is the Fed's investment in US government-backed debt, a step taken to stimulate the US economy, as it should lead to lower interest rates. As consumer borrowing is driven by lower interest rates, consumer spending increases along with the demand for goods and services, finally resulting in a new demand for oil and increasing oil prices.

"There are a number of ways an investor can get exposure to oil; the most obvious method is to invest in a company within the oil and gas industry, such as Royal Dutch Shell or British Petroleum (BP). A more direct route to consider, however, would be using an Exchange Traded Commodity (ETC) focused on oil - investors can put their money directly into ETFS Crude Oil (CRUD), for example."

Barbara-Ann King, continued: "Getting investment exposure to oil can provide additional portfolio diversification through exposure to a commodity. Investors should also be aware that many products that provide investment exposure to oil can be accessed through tax efficient wrappers such as Investment ISAs and SIPPs as well as traditional share dealing accounts like MarketMaster,."