As crude oil prices hit a new peak near US$130 a barrel yesterday, oil speculators were already focusing on the next key price point - US$150 a barrel.
US light crude hit US$129.60 on deepening worries over global stockpiles and signals from Opec that it won't increase supply.
Billionaire investor T. Boone Pickens said he expected oil to hit US$150 a barrel this year.
Earlier this month Goldman Sachs predicted it could top US$200 by 2010 and will average US$141 for the rest of the year.
Oil prices have risen sixfold since 2002 as surging demand in China and other developing economies strained supplies and drew in a wave of investor interest.
There are now fears that market speculation is driving the price.
"There's a feeling that some of these forecasts of US$150 oil might be right," said Peter Beutel, of industry analysts Cameron Hanover. "So why not buy it now, rather than later?"
Opec is blaming speculation for the price surge and argued that oil markets were well supplied as it decided against increasing production on Tuesday. With many pundits now picking the kiwi dollar to fall over the coming months as the economy slows New Zealand drivers may face a double whammy at the petrol pump.
New Zealand buys Dubai crude oil - typically trading at several dollars a barrel less than the US light crude now testing US$130.
But if Dubai crude oil was to hit US$150 a barrel and the kiwi fell to US70c that would push the local pump price up to $2.48 for a litre of 91 according to estimates by Westpac economists. Currency specialists such as Sue Trinh at the Royal Bank of Canada are forecasting the kiwi will drop to US69c by the end of the year.
There were a lot of variables to consider and sentiment could still change quickly in either direction, said Westpac senior economist Doug Steel.
"There are some out there talking about US$200 but others talk about the marginal cost of US$80. So there is a floor and the ranges around these views are enormous."
Westpac is still picking the dollar to trade at US77c by year's end.
If you took the view that oil prices were a barometer of demand for commodities in general it was less likely that you would see the dollar fall hard at the same time as oil prices spiked, Steel said.