December 03, 2008

Oil price to reach USD 125 a barrel – Hedge fund

Mr T Boone Pickens heads of BP Capital hedge fund recently said that “It will go up. Oil is moving to a substantially higher level say above USD 125 a barrel.” He added that US crude futures hit a record USD 115.54. Oil prices have more than quintupled since 2002, propelled higher by soaring demand from emerging economies like China alongside slow increases in global production capacity.

Mr Pickens said that despite new production from the Canadian oil sands and elsewhere, Mr Pickens said that global crude oil production is unlikely to rise above its current rate of about 85 million barrels per day, while global demand will likely hit 87 million barrels per day in the third quarter of 2008.

Mr Pickens also expects that US natural gas prices to rise from current levels near USD 10 per million British thermal units to USD 12 to USD 14 this upcoming winter.

Mr. Pickens said his fund is now looking for oil and natural gas prices to rise. He told reporters that “The position is long, not short. I covered the short position it was a mistake on my part.”