IT looks as if the days of cheap oil have gone for ever. At least, that appears to be the view in the Square Mile where oil shares have been reaping rich rewards during the past year.

Broker Oriel Securities reckons that despite the recent correction, crude markets look to be well-supported by near-term factors such as Iran's threat to the US to cut back on production and disrupt supplies through the Strait of Hormuz.

As a result, Oriel has raised its forecast for Brent crude by $10 a barrel to $65 for this year and by $5 a barrel to $55 for next year.

Oil analyst Richard Rose at Oriel says: "Our numbers still revert to an unchanged mid-cycle price of $45, which now stands at a 35% discount to the futures curve. Exchange rate and UK gas price assumptions have been left unchanged for the time being."

Rose sees the recent market correction as an opportunity rather than a threat, but with lessons to be learned.

"So far, sector share prices have been driven by the momentum of rising crude prices but appear to have unhinged when they stalled above $70 a barrel," he says.

In future, operational factors may well prove to be the difference in terms of valuations. Oriel has raised Burren Energy from reduce to add and Dana Petroleum from sell to reduce, and has downgraded Roc Oil from buy to add and Sterling Energy from hold to reduce.

Premier Oil and Hardy Oil Gas remain a buy, Venture Productionan add and Tullow and Cairn Energy a hold.

Heavy turnover was recorded in airports operator BAAafter Spain's Ferrovial confirmed its agreed Pounds 15 billion bid of 950p a share with a swoop on the shares. It picked up about 150 million, or almost 14% of the company, at 9501/4p. Ferrovial beat a competing offer of 9551/4p a share from a consortium led by Goldman Sachs, but the latter may still come back within the next few days.

Now Centrica has become the focus of attention, and is being tipped as the next infrastructure group to go under the hammer with an overseas predator circling.

Brokers say the profits from the BAA deal will soon come pouring back into the market and the likelihood is that much of it will target the British Gas distributor.

Favourite to make a move is Russia's Gazprom, Europe's biggest gas supplier.

Yesterday, it repeated its pledge to acquire 20% of the British gas market, and City speculators reckon that a full bid for Centrica may be on the cards.

Gazprom expressed an interest in bidding for the company earlier this year but then felt obliged to play down the story. At these levels, Centrica is valued at almost Pounds 10 billion.

NeuTec Pharma leapt more than 65% after the company said it was in talks that could lead to a bid. At these levels, it is valued at almost Pounds 200 million.

Synergy Healthcarewas another firm market after chief executive Richard Steeves bought 27,000 shares at 471p each, a total of Pounds 127,170, stretching his holding to 2.02 million, or 5.47%.

Security printer De La Rue benefited from some bullish comments made by broker Merrill Lynch, which moved from neutral to buy and set a price target of 575p.

Merrill forecasts strong current-year earnings growth.

The prospect of yet another rise in US interest rates continued to weigh heavily with investors and shares in New York suffered another day of losses.

The Dow fell 46.58 to 11,002.14 having recorded its second- biggest fall of the year on Monday. The nervousness stemmed from Fed chairman Ben Bernanke's comments about the need to curb growing inflationary pressures.

The picture was little better in Asia today, where losses were also extended amid fears about the US economy. I n Tokyo, the big exporterswereworst hit, with companies such as Conon Inc and Honda Motor marked sharply lower.

The Nikkei 225 shed 288.85 to 15,096.01.

In Hong Kong the Hang Seng index was down 104.25 to 15,868.86 by the end of the morning session.