Investors slick to oil

Predictions of oil prices will hit $200 a barrel have spurred investors to commodities.

This week Goldman Sachs projected the price of crude oil – currently now at $125 a barrel – could reach as high as $200 a barrel in the next two years.

"Commodity trades have rallied recently and investors upped a gear this week following Goldman Sachs' projection," said Angus Rigby, chief executive of TD Waterhouse.

"TD Waterhouse customers have homed in on oil and gas investment in recent weeks following reports of a bullish outlook on the future consumption of commodities from industrialisation and urbanisation in emerging countries."

However, investor sentiment is mixed over the future of oil, with some investors going short on the sector and taking their profits from giants BP and Shell.

"The possibility of a downward spike on oil price evidently weighing heavy on the minds of some," said Mr Rigby.

"Both [BP and Shell] reeled with trader activity following their strong first quarter results at the end of April and consequently they took centre stage this week. BP was second most popular sell making up approximately a sixth (16 per cent) of these trades and Shell followed suit in 8th place."

However, he added the emergence of AIM-listed oil and gas explorer Irvine Energy as TD Waterhouse's fourth most popular buy this week indicated that customers could merely be shifting focus from one oil company to another.

The banking sector also took a lot of attention over the week.

Royal Bank of Scotland (RBS) was TD Waterhouse's most traded stock with 28 per cent of all buys and sells.

The top five retailer buys for the week were RBS, BP, Barclays, Tesco and HBOS. The biggest sales of the week were RBS, Lloyds TSB, HBOS, Irvine Energy and Barclays.

The May Day bank holiday also brought now rest for investors. TD Waterhouse reported international trades accounted for ten per cent of daily trading activity while London markets were closed on Monday.

Daniel Barnes