Oil price 'set to stay high'

27 September 2007

Oil prices are likely to remain high for the remainder of the year, according to a market expert.

Crude oil is currently trading at around $20 (£9.89) a barrel higher than at the start of the year, amid fears of supply problems during the high demand of the northern hemisphere winter.

A report published by the US Energy Information Administration on Wednesday revealed the country's stockpiles of crude, petrol and heating oil have all risen.

This should have been a signal for prices to fall, according to Paul Harris of Bank of Ireland Global Markets, but instead the value of oil actually rose.

The lack of downward price movement was evidence of the "underlying strength of the bullish trend in the market", said Mr Harris.

"This is clearly reflective of the deep-rooted concern over the demand-supply gap with traders wary of aggressively shorting the market in the face of potential threats to supply," he explained.

Global demand for oil remains strong and any significant geopolitical or meteorological event could send the market "sharply higher", added Mr Harris.

Figures compiled by BoilerJuice show that the average cost of heating oil in the UK has risen by around ten per cent in the past two months, so with little sign of the price increases stopping heating oil users may find it cheaper to buy their winter supplies now.