Oil seen under $78 through 2007: Gartman

NEW YORK (Reuters) - Oil is not expected to surpass or even match last year's record high of $78 a barrel this year as sellers turn out in force to tame every rally, independent investment manager Dennis Gartman said on Tuesday.

But U.S. benchmark West Texas Intermediate (WTI) crude may eventually climb to around $80 a barrel in the next two years with energy markets generally on the ascent, Gartman said at the Reuters Investment Oulook Summit in New York.

"I think it's possible. I don't think it'll happen because of any weather-related circumstances. I think it'll get there because the trend is up and demand will continue to be relatively high," he said.

"You may not be bullish on oil but you can't be bearish on it," the publisher of the Gartman Letter said. "Outside of the WTI and the attendant problems of deliveries of crude oil into Cushing, Oklahoma, crude oil is up."

Much of the wind for $80 oil will come from China, Gartman said.

He related an anecdote about China's Shanghai City where thousands of bicycles have been replaced by Mercedes Benzes over the last 15 years -- reflecting an exploding demand for luxury living and the commodities needed to fuel such a lifestyle.

"The difference in 15 years is just stunning, and that's just Shanghai. It hasn't moved 100 miles west of Shanghai yet. Will it? You bet. You bring China into the 21st (century) and they tend to leap into the 21st century."

Gartman said crude oil was having trouble staying above $65 a barrel now as there were as many players in the market hedged to take profit as there were those wanting sustainable high prices.

"In every good rally, there are going to be good sellers," he said.

"If you are a highly leveraged oil production facility and for the first decade of your life, crude oil was at $14 a barrel and your production cost was $22, it didn't feel very good. But now you've got WTI at $65 and production cost at $17, it's probably a hell of a business. So your propensity to lay hedges will be reasonably large."