Oil prices 'could rise further in 2008'

21 December 2007

Crude oil prices could hit a new record high early next year, a leading city analyst has predicted.

Growing demand from emerging economies, worries about supply and tensions in the Middle East have combined to send oil prices to a succession of all-time highs in the past few months.

The upward trend has also seen the cost of heating oil skyrocket, with figures compiled by BoilerJuice showing that the average UK price for the fuel is now 40 per cent higher than in December 2006.

Merrill Lynch's head of commodities research Francisco Blanch believes there could be more pain ahead for consumers in the coming months and in a report entitled 2008: The Global Macro Year Ahead predicted that oil prices will spike further.

However, he added that crude oil prices are likely to fall away from their current level above $90 (£45) a barrel before the end of 2008.

"Increased production and potentially slower growth should push prices below $70 a barrel by the final quarter of the year," explained Mr Blanch.