Oil seen topping $80/bbl, commodities to boom

LONDON (Reuters) - Crude oil is set to rise above the $80 a barrel level in the next few months, as output tails off, maintaining energy's role in a continuing commodity bull market, a hedge fund manager said on Wednesday.

Benchmark U.S. light sweet crude oil futures for May delivery CLc1 were around $66.33 by 1312 GMT. Oil hit a record $70.85 a barrel in late August 2005.

"In the next few months we will see oil above $80, as it has passed the peak of the production cycle," David Murrin, chief investment officer at UK-based Emergent Asset Management said at the Reuters Hedge Funds and Private Equity Summit on Wednesday.

Although oil markets are well supplied, worries about Nigeria and fellow OPEC producer Iran, which is embroiled in a dispute with the international community over its nuclear program, have prevented prices from falling far.

Murrin said energy, like other major commodities, had much further to run in the current bull market.

"They (commodities) are more and more in vogue. This cycle ... is 15 years away from the peak. The world is becoming over-populated and under-resourced," he said.

Prices of many key commodities have soared during the last two years in a red-hot bull market fueled by buying from systems-based, hedge and, most recently, pension funds.

"Base metals are on fire at the moment, and softs will be next ... Watch sugar," Murrin said.

On Wednesday, copper MCU3 used in wiring and construction, traded at a record $5,685 a ton, while zinc MZN3, utilized to galvanize steel panels to protect against corrosion, hit a record $2,801.50 a ton.

Soft commodities, by comparison, have lagged. In February, sugar prices hit 25-year highs of 19.30 cents a pound. However, prices at these levels are not expensive -- in 1979 sugar hit 45 cents, while in 1973 it was as high as 63 cents.