Oil is headed straight to $100 (€73) a barrel, Venezuelan president Hugo Chavez said hours after prices surged this week to an all-time high of almost $79.

But others remember the price collapses of the past four years and wonder if the markets are headed for a repeat.

US crude climbed to a record high of $78.77 a barrel on Wednesday, surpassing the previous peak of $78.40 reached in July 2006. Prices have since fallen more than $2, trading near $76 a barrel yesterday, as some analysts warn of a market correction.

"There will most likely be a sharp correction, as prices are exceptionally high now," said Davide Tabarelli, chairman of energy research and consultancy company Nomisma Energia.

"The market will sooner or later move back to equilibrium."

Each year since 2003, the market has entered a sharp correction phase after climbing to a high. After last year's peak, prices tumbled 36 per cent in the next six months to less than $50 a barrel.

Analysts said this latest rally has been fuelled mostly by an influx of new investment money, rather than by any major news such as hurricanes or Middle East tensions. "We've been lacking bullish news for a while. When the correction starts, it could go very quickly," said Olivier Jakob of Petromatrix. "Going back to $60-$65 is not that far-fetched."

But for every major correction in the past five years, prices eventually recovered and surged to new highs. Mr Chavez is not alone in believing oil's rally will continue. Goldman Sachs said last month prices could reach $95 by the end of the year. - (Reuters)