Forbes predicts oil will drop to $35 within a year

Steve Forbes, the billionaire business publisher, predicted that the oil bubble will burst inside a year and the price will plunge, as the impact of Hurricane Katrina sent the price of oil soaring to new record levels.

He spoke as Katrina shut down almost all the flow from the Gulf of Mexico, which provides over a quarter of the United States' oil. "I'll make a bold prediction. In 12 months you're going to see oil down to $35 to $40 a barrel," he said. "It is a huge bubble, I don't know what's going to pop it but eventually it will pop - you cannot go against supply and demand, you cannot go against the fundamentals forever."

Oil production in the gulf was down by 92pc, or 1.4m barrels, and gas production fell by 83pc as the hurricane threatened severe damage to the installations in the region. In response, the price of Brent in London spiked $3.22 a barrel to a record $68.09 while in New York oil was up $2.65 a barrel to $69.25 during late trading.

A neighbor of mine (an oil man) and I were chatting the other day and he said exactly the same thing.