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What does the current oil price mean for the investors?

Everybody knows that from the beginning of this month the oil price has breached a new record:

Oil soared by more than $6 a barrel to over $134 on Friday June 6, bringing gains in the last two days to $12 as the dollar weakened further on a jump in the jobless rate in the United States.

Remarks by Israel’s transport minister that an attack on Iranian nuclear sites looked “unavoidable” and a Morgan Stanley report predicting oil could reach a record high of $150 by July 4, also sent crude prices roaring upwards.

“We are calling for a short-term spike in oil prices,” the bank said. Morgan Stanley expects a “spike” in oil because “Asia is taking an unprecedented share” of Middle East exports, wrote analyst Ole Slorer. Investors hedging against the dollar this year have spurred oil, gold and corn to records. Workers at a division of Chevron Corp. in Nigeria threatened to strike because the company hasn’t met demands, a union official said.

Today, Friday June 27th, oil held a new record near 142 USD/barrel, sending deep shocks all over the US economy once again. It seems that we will have to live for a long while with high prices.

What does the huge oil price currently on the market mean for the investors?

Of course, a higher cost of living – and lower amounts of money to be invested in the stock market. For a common investor, several hundreds of dollars less per month, in a period where shres tend to trade cheaper and cheaper, is not really good news. On the other hand, if you are one of those smart investors who have (or happens to have some) spare cash for investments, good times are ahead. Dow Jones is below 11,000 and continues to go down, whilst many analysts now fear a recession. Companies start to trim jobs like hell and to loose some useless fat, which means that we will have some very good shape survivors when the recession ends. Of course, the question remains when…

So this would be a good time to buy shares. Maybe also some commodities options or futures, since the demand from China continues to rise unpredictably high. The current oil price means more turbulencies and more to see ahead. And I fear it is only the beginning…

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