He's back. The speculative trading beast is pushing up gasoline, diesel and heating oil prices, and scaring economy-watching investors in the process. There are a few defensive weapons to protect your portfolio. It's time to unsheathe them.
Oil traders, producers, refiners and speculators, citing tensions in the Middle East that could cut supplies, have once again revived the monster. Crude prices hit a nine-month high recently to top $120 a barrel and gasoline has spiked by as much as 40 cents in some regions of the United States. The national average price of gas could hit $4 to $4.25 per gallon by April, according to Tom Kloza, chief oil analyst at Oil Price Information Service.
The overall impact is felt everywhere. For every penny increase in the price of a gallon of gasoline, spending declines an estimated $1 billion throughout the United States, according to the energy research firm Cameron Hanover. At this point, that could kick the crutches out from under the wobbly U.S. economy.
Wall Street and derivatives traders have taken to the courts to block new rules curbing speculation through "position limits," so prices remain free to go stratospheric again.
Keep reading: Protect your investments from oil shocks | Reuters.
