Pickens sees crude retesting record high in 2007

By Svea Herbst-Bayliss

NEW YORK, April 11 (Reuters) - T. Boone Pickens, long known as one of the biggest bulls in the oil market, said crude will probably reach $78 in 2007, retesting the record high set last summer.

Pickens, a trained geologist turned investor whose $4 billion hedge fund BP Capital earned over $1 billion last year, said strong demand and limited supply will drive crude prices higher during the coming months.

"The average crude price for the year will be somewhere between $65 and $70," the 79-year old investor forecast, adding "and it'll hit $75 to $78 this year".

Gasoline prices, he said, will follow and will certainly top $3 per gallon soon. Pickens spoke after a forum on corporate governance.

Crude oil for May CLc1 delivery traded just below $62 a barrel late on Wednesday, erasing gains put on earlier in the day after U.S. government data showed a large drawdown in gasoline inventories.

Pickens has not wavered from the forecasts he made earlier in the year when oil prices were far lower amid warmer weather and stronger supply.

Lower prices weighed heavily on BP Capital's commodities-oriented fund, which started 2007 with losses of roughly 30 percent, an investor in the fund said.

"We took a really big loss in the first two weeks of the year," Pickens said.

Pickens, who describes himself as having a good feeling for fundamentals and understanding commodities, said he made up the deep losses by being "long oil".

"The good thing is that this happened in the first two weeks of the year and now we have 50 weeks to make it up," Pickens said he told his team after seeing the massive decline in January.

"Yesterday we made our money back. We are back in the black," he added.

BP Capital's fund that concentrates on stocks is up more than 4 percent this year, said the investor who declined to be named.

Pickens said the current price spread between the New York Mercantile Exchange and London where U.S. oil is cheaper now, will likely clear itself out. "I think the situation will go away."

London Brent crude LCOc1 is almost $6.00 a barrel above U.S. West Texas Intermediate crude CLc1 for the prompt month.

Pickens personally earned more than $1 billion last year, in part because he correctly bet that natural-gas prices would decline last fall, the investor said.