Oil prices 'likely to remain high'

31 January 2008

The price of heating oil is likely to remain high for the next six months, a US government department has predicted.

Crude oil prices, which are the main factor driving movements in the cost of home heating oil, hit record highs in early January, only to fall away sharply because of fears about the state of the US economy.

However, the Energy Information Administration (EIA) warned in its latest weekly report that consumers should not assume crude prices will drop significantly.

"While prices have declined from their peak, crude oil prices do remain relatively high, based on historical levels, and EIA expects monthly average oil prices to remain above $85 per barrel over the first half of 2008," it said.

The report also revealed that stocks of crude oil in the US climbed by 3.6 million barrels last week, but confirmation of a further interest rate cut of 0.5 percentage points ensured prices continued to climb on Wednesday.

US crude for March delivery closed up 69 cents at $92.33 (£46.47) a barrel and the equivalent Brent crude contract gained 53 cents to settle at $92.53.

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