Oil prices predicted to rise

19 February 2008

Heating oil users are facing the prospect of fuel bills continuing to rise in the coming months, an analyst has predicted.

Crude oil prices, which are the major factor in determining the cost of home heating oil, fell away sharply after reaching record highs in January as concerns grew that the US economy is heading into recession.

However, a spat between Exxon Mobil and the Venezuelan government that could lead to the country halting exports to the US has reversed the trend.

Prices have risen sharply in recent days and rumours suggesting the Opec nations are planning to cut output in the near future have put further upward pressure on prices.

Gerard Burg of National Bank Australia told Bloomberg that worries about falling supplies are likely to prove far more influential on oil prices than the state of the US economy in the near future.

"Oil markets are really more concerned about growth in China and India as well as the prospect for further supply cuts, rather than concerns about the U.S. economy," explained Mr Burg.

The price of heating oil futures was up 3.2 cents at $2.6789 (€1.82) a gallon during early trading on Tuesday, while US crude reached $96.45 a barrel, up 95 cents from its previous close.

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