Global Commodities stays bullish on oil

SYDNEY (Reuters) - Index-based investment fund Global Commodities remains bullish on oil prices even after they hit the $100 mark, trebling in just four years.

Fund manager Justin Wilks said strong demand from emerging economies could offset the impact of lower U.S. demand in the event of a recession, cushioning the impact for prices.

"We still have our maximum quota on oil and we don't see any reason to lighten up our position at all since all the risks are still to the upside," said Wilks, who helps manages a commodities-wide portfolio of around $250 million, one of the few pure resource funds in Asia.

"Everything in the world at the moment points to prices heading north. There is the issue of tight supplies in the U.S. as well as geopolitical tensions in large parts of the world, including Iran, Pakistan, Nigeria and Algeria," said Wilks.

South Australia-based Global Commodities, founded three years ago as pension funds and long-term investors began pouring tens of billions of dollars into commodities, runs funds that can shift capital between cash and major long-only commodity indices.

Its portfolio is benchmarked 50:50 against the energy-heavy S&P Goldman Sachs Total Return Commodity Index and the broader CRB/Reuters Index, which gained 32.6 and 22.8 percent, respectively, during 2007.

Oil fell on Thursday to hover above $99 a barrel, after vaulting to a lifetime high of $100 the day before on geopolitical risks, tight energy stockpiles, a weak dollar and speculative buying.

U.S. oil stockpile data due later on Thursday is expected to show a further decline in crude and distillate stockpiles, which may help support oil even as the risk of a U.S. downturn grows.

"Our view is that oil will stay at pretty high levels, for at least the next one to two months through the northern hemisphere winter heating season," he said.

Crude prices have jumped about 57 percent in 2007, a whisker away from the spike in 2002 that was the biggest annual gain this decade. Oil's surge last year was largely fuelled by supply concerns and speculative buying as the U.S. dollar fell.

(Reporting by Fayen Wong; Editing by Jonathan Leff and Ramthan Hussain)