Opportunities for investors as oil price hits new high

Despite the recession continuing to take its toll globally on the automotive industry, and stalwarts such as Ryanair reporting its first loss in 20 years, the outlook is brighter for those investors who have put their confidence in oil as the price of oil has recently hit new highs for the year above $65/bbl.

Barbara-Ann King, Head of Investments at Barclays Stockbrokers, comments: "There is no doubt the recession has taken its toll on the automobile industry. Takeovers and mergers are rife as companies try to steer themselves away from bankruptcy and the harsh knock-on economic consequences, including redundancies. However, those invested in oil - the lifeblood of the automobile industry - have cause for cheer as the price recently hit highs for the year.

"Investing in 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."

Henk Potts, Equity Strategist at Barclays Stockbrokers, said: "There are a number of long and short-term factors which mean the price of oil is likely to remain firm into the second half of the year. In the long-term there are reasonably restrictive policies from OPEC, and the fact that medium and long-term projects to find new reserves of oil have been delayed. Also, new oil reserves are often found in politically volatile countries. In the short-term, we are moving into the crucial ‘driving' holiday season in the US which is likely to increase demand; plus the constant threat of weather disruption in hurricane season will also affect the short-term price. Most importantly though, the most crucial factor for the price of oil will be the speed and strength of the recovery of the global economy."