Supply concerns drive oil price rise to record high

CONCERNS ABOUT supply, as well as optimism that central banks would stimulate growth and secure the euro, combined to drive up oil prices to record highs during August.

These factors lay behind a 4 per cent rise in the Bord Gáis Energy Index, the State gas company said.

The index now stands at 151, an increase of 9 per cent on August 2011. Oil prices rose 7 per cent in euro terms and 9 per cent in dollars.

Future gas prices for the coming winter rose by more than 3 per cent as a result of rising Brent crude oil prices. European gas prices for the coming winter and summer are closely linked to the international price of a barrel of oil.

Ongoing tensions in the Middle East and a tightening global oil market are dominating sentiment and have resulted in significant oil price increases in recent months, said John Heffernan, a power trader with Bord Gáis.

The improvement in the euro had only partly sheltered Ireland from the worst effects of this increase.

The market’s assessment of the process in dealing with the euro crisis could dictate the future movement of oil prices in the months ahead, he said.