Oil today rose to a new high of $129 a barrel and prices are set to hit $150 this year as concern grew over Opec’s consistent refusal to lift supplies to counter growing demand.

Boone Pickens, a hedge fund manager, said today that oil will reach $150 a barrel in 2008, echoing a forecast released by Goldman Sachs last week that predicted prices will hit $141 in the second half of the year.

In New York, the price of light sweet crude for June delivery touched $129.31 per barrel before falling back to $128.95. In London, Brent crude also reached a new record at $127.49.

Credit Suisse increased its forecast for US crude in 2008 from $91 a barrel to $120 while Societe Generale also raised its expectations for 2008 by $14 a barrel to $115.

It emerged yesterday that Opec, the 13 country cartel that produces 40 per cent of the world’s oil, would not increase production prior to a meeting in September despite rising demand for fuel, especially from crisis hit regions such as China.

Last week, Saudi Arabia, a key member of Opec, pledged to increase oil production by 300,000 barrels a day following a plea to raise supply by US President, George W. Bush.

However, Chakib Khelil, president of Opec, said he did not expect output to be increased, adding that “current prices are not based on supply and demand." Oil prices have surged by more than a quarter since the start of 2008, when they struck $100 a barrel for the first time.

Rising oil prices and the subsequent rise in household energy bills have contributed to rising inflation which is currently 3 per cent, above the Government's 2 per cent target, and are set to increase further.

In the US, concern about inflation escalated when it emerged that producer prices, excluding food and fuel, rose at the fastest rate in 17 years, sending the Dow Jones industrial average plunging by 180.7 points to 12,847.5.

Core producer prices rose a higher-than-expected 0.4 per cent in April, or 3 per cent compared to last year, the fastest rise since 1991.

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