We could see $120 a barrel oil or more as spooked investors stampede into commodities, warns Cera. But the gathering storm clouds over the US economy probably mean that, eventually, prices will ease Oil has become the new gold – a financial asset in which investors seek refuge as inflation rises and the dollar weakens, claims Daniel Yergin, chairman of Cambridge Energy Research Associates, a consultancy. “The credit crisis has been fuelling the flight to oil and other commodities, and that will last until the dollar strengthens or the recession becomes more pronounced,” said Yergin. Oil prices surged yesterday in response to further declines in the dollar, as the Federal Reserve made its latest cut in US interest rates – this time by 0.75 basis points – in an effort to stave off economic crisis. Prices cooled off slightly today, but remain just a few dollars short of the all-time highs set at the start of this week: $111.80 a barrel in the case of New York light oil futures for April delivery and $107.97/b for May Brent, both substantially higher than the previous inflation-adjusted record high (for US futures) of $103.59, set in April 1980 (according to Cera’s calculations).