Oil prices 'set to slide'

5 February 2008

Oil prices are likely to fluctuate throughout 2008 but should be significantly lower by the summer, according to a new report.

Crude oil prices, which are the major factor in determining the cost of home heating oil, reached record highs around the $100 (€67.64) a barrel mark in early January, but have since fallen by ten per cent because of fears of a recession in the US.

A study by American Express Bank's global economics unit found evidence to suggest the downward trend will continue.

It noted that although global production is likely to increase slowly throughout the year, demand for oil products is expected to fall as economic conditions start to change.

"Oil prices are likely to fluctuate in a wide range in 2008 but prices should move lower from current levels," the unit said, adding that it expects crude to cost around $70 a barrel by the middle of the year.

Meanwhile, heating oil futures gained 3.44 cents to close at $2.4833 a gallon on Monday, while US crude rose $1.06 to settle at $90.02 a barrel and Brent crude climbed $1.03 to end the day at $90.47.