Oil remains a big draw for institutional investors

London: Tension in major exporter Nigeria and anxiety about US gasoline supplies mean oil is still a big draw for institutional investors, even if their initial enthusiasm has waned.
Big financial players, including naturally cautious pension funds, moved into commodities, including oil, over the past five years.
They helped to stoke prices, which have come close to revisiting last year's record highs of near $80 a barrel and few are predicting a crash.
"Oil is still attractive," said Angus McPhail of UK-based fund manager Alliance Trust. The crude oil futures are indicating that prices will continue to rise, he said.
"If that's the case then that does make it quite an attractive way to mitigate risk in equities and other asset classes."
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Last year began with a surge of institutional investment money that drove a strong rally that peaked at $78.40 in mid-July.
The picture this year appears to be one of growth of these investments, but at a slightly slower rate.
A Barclays Capital survey of institutional investors in February found more than half who took part estimated assets under management in commodity products could reach $120-$150 billion by the end of 2008, assuming $100 billion invested currently.