Could Oil Reach $250 a Barrel?

Gazprom, Russia’s gas monopoly, predicts oil prices will reach  $250 a barrel in 2009.

Alexey Miller, Gazprom CEO, said: "Today we witness a very great change for hydrocarbons, the level is very high and we think the price of oil will reach $250 a barrel."

Analysts, on the other hand, project 2009 prices as ranging between $100-$200 a barrel.

At the same time the International Energy Agency warned that record high oil prices are needed to choke off demand in order to balance the oil market, which is struggling to meet Asian demand.

IEA noted so far there are some signs of slowing demand such as in the airline industry, but "very few signs of slowing demand in non-OECD countries where economic growth is far more significant than price in determining demand".

There are signs of lower supply, however. IEA reduced its forecast for non-Opec supply growth to just 455,000 b/d, or 225,000 b/d below last month’s forecast.

Most of non-Opec supply will come from biofuels, which would account for 72% of the supply increase. The non-Opec supply growth forecast for 2008 is now below the growth achieved by the group both in 2007 and 2006 in spite of significantly higher oil prices.