Crude oil rose to a record close of $78.21 a barrel in New York recently on speculation that demand will outpace supply as refiners increase fuel production.
Bets on rising prices by hedge funds and other speculators rose to a record earlier this month, according to U.S. Commodity Futures Trading Commission data. Global demand will climb 1.7 percent next year, showing no sign of slowing because of high prices, a Deutsche Bank AG report showed.
"There's significant growth in global energy demand, and production isn't keeping up," said Peter Schiff, an investment adviser and president of Euro Pacific Capital Inc., in Darien, Conn. "Prices have to rise because of this imbalance. I'm sure we are going to pull above $100 a barrel in 2008."
A U.S. pullout from Iraq may be the event that pushes oil to $100 a barrel this year, said Boone Pickens, the Dallas hedge fund manager who has joined Forbes Magazine's list of billionaires because of his bullish bets on energy prices.
Brent, which is produced in the North Sea, lost its premium over West Texas Intermediate blend, the U.S. benchmark, last week. Brent had been higher than New York-traded WTI for most of this year, as crude-oil supplies rose.
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