NEW YORK ( TheStreet) -- I was talking to Jim Cramer about oil and its indefatigable price strength.
No matter the news from the Fed or the motion in the stock market, it seems that oil continues to plod along, slowly going higher -- with West Texas Intermediate Crude now trading $98.50 a barrel and Brent Crude at more than $106 a barrel.
Jim asked what continues to drive oil higher, particularly in the face of bearish supply fundamentals.
It seems to me first that oil has now become a repository of value in the face of today's Federal Reserve decision. With inflation threats from the calls for tapering or outright tightening in the future on the table, investors have flocked to oil much as they naturally flock to another commodity -- gold.But gold has struck me as a very tired trade, for very good reason. After a 20-year run, it now looks like 2013 will not be another up year for the metal. And while gold may not be rolling over by any means, it wouldn't be wrong to believe that a lot of investors are looking for another asset to augment their holdings in gold while providing diversification. And I believe that investment has become oil. With ETFs and futures funds available to the retail investor, oil can be as easily held, at least financially, as gold can. Besides the substitution that investors are making toward oil from the gold trade, I also believe that the geopolitical situation for oil remains very scary. Even though there is little focus coming from the media on the tinderbox in Iraq, the military support that has begun from the U.S. to Syrian rebels, the rise of the Muslim Brotherhood in Egypt and the overall increase of influence in the Middle East by Iran, those issues remain real. And they are being reflected in the very steady and very high price of oil. I talk more about oil prices and some ways to play them with Jim in the video above. At the time of publication, Dicker held shares of British Petroleum (BP - Get Report). Action Alerts PLUS, which Cramer co-manages as a charitable trust, has no positions in the stocks mentioned.