Petrol prices set to soar over 100c

PETROL prices are set to increase in the run up to the summer despite a slight easing in crude prices yesterday on the world markets.

Automobile Association (AA) spokesman in Ireland Conor Faughnan last night warned the average cost of a litre of petrol will be up to over 100 cent per litre by June against the current March average of 95.9c.

That's up from 94.8c in January.

Last November the price of petrol per litre rose to a high of 102.1c but fell back slightly to 98.6c in December.

Two factors will influence the price going forward said Mr Faughnan the value of the dollar against the euro and how the markets pan out during the year.

He said the stronger euro to the dollar has been a major factor in keeping the cost of auto and domestic fuel down in Europe.

But even if the euro stays strong, as expected, rising demand in the US for petrol during the "driving season" tends to push up prices during summer months, he said.

World oil prices eased slightly in afternoon trading yesterday on the prospect of higher oil production in the months ahead.

However at $54.77 US, light crude is just 90 cents off the all time record high of October 2004 when prices peaked at $55.67.

Despite the easing, concerns remain that output will struggle to keep pace with demand and prices are likely to stay high.

In early trading, oil prices in New York had risen despite the possibility of an OPEC output rise, as top producer Saudi Arabia said more supplies would be needed to meet a substantial increase in demand later this year.

In earlier trading, US light crude futures rose 22 cents a barrel to $55.17, within striking distance of last October's all-time high of $55.67.

London Brent was 23 cents a barrel up at $53.89.

"We are concerned about prices, we are also concerned about economic growth and we are particularly concerned about economic growth in developing countries," said Ali al-Naimi, Saudi Arabia's oil minister, ahead of OPEC's meeting in Iran today.

While current supply was sufficient to meet demand, the thirst for OPEC's oil would increase later this year, he said.

His comments follow a report by the International Energy Agency last week which raised its oil demand growth forecast for 2005 by 290,000 barrels per day.

Analysts say markets' muted reaction to Naimi's proposal to raise OPEC's output also reflects concern that global demand is continuing to race ahead at a time the cartel has only limited spare capacity.