Sell your oil stocks now while you can?

By | June 3, 2008

Sell your oil stocks now while you can

George Soros, the billionaire hedge fund manager, will warn later today that the oil price has become a bubble that could trigger a stock market crash.

The Financial Times reported today that Soros will tell the US Senate commerce committee that oil was pushed to its recent all-time peak of $135 a barrel by a new wave of speculators.

He believes that the doubling in the price over the last year is partly due to investment institutions, such as pension funds, who are pumping money into indexes that track the cost of crude.

According to the FT, Soros will warn that there could be very serious consequences for global stock markets if the institutions suddenly began betting on a fall in the oil price.

He compares it with the stock market crash of 1987, which was partly caused by a sudden rush of money into portfolio insurance – which institutions used to protect themselves against a fall in share prices. – bln

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