Oct. 11 (Bloomberg) -- Boone Pickens, who has made $3 billon from the original $34 million invested in his energy commodity hedge fund almost a decade ago, said crude oil will reach $70 a barrel before the end of this year.

``I think you'll see $70 before you see $50,'' said Pickens, whose Dallas-based BP Capital Energy Commodity Fund is up 120 percent this year. ``It'll tighten up here in the fourth quarter and move back up and we'll see $70 before the first of the year,'' Pickens said. ``I'm making decisions on that basis.''

Pickens, who is based in Dallas, has made his money betting on the direction of crude oil, gasoline, heating oil and natural- gas futures. The 78-year-old former oilman correctly predicted the multi-year rally in energy prices based on his view that crude oil is getting harder to find and produce. Rising demand is outpacing supplies, he said, and prices will rise until they force consumers to use less.

Pickens said oil would reach $100 a barrel by next July, reiterating a forecast he made in a July 25 interview that oil would rise to that level within a year. Oil touched a record $78.40 a barrel on July 14 in New York and has fallen 26 percent since then.

Crude oil dropped 43 cents to $58.09 a barrel at 1 p.m. today on the New York Mercantile Exchange.

``It will take a geopolitical event to cause it to happen,'' Pickens said when asked about his $100 oil prediction. ``But we've got a lot of opportunities for those.'' Iraq and Nigeria, where violence and sabotage is already limiting output, may be vulnerable to further supply disruptions, or the U.S. dispute with Iran over its nuclear research may worsen, Pickens said.

OPEC Support

Pickens also said that the Organization of Petroleum Exporting Countries will work to keep oil closer to $70 a barrel.

Promises from OPEC officials of a production cut have so far failed to halt the slide in oil prices. OPEC's President, Edmund Daukoru, this week said the group would reduce output by 1 million barrels a day, equal to 3.4 percent of what the 11 member countries produce. A spokesman for Daukoru, Levi Ajuonuma, said today that the cuts would be voluntary.

``They've decided they're going to support the market, and they like the price closer to $70 than $50,'' Pickens said. ``If they have to cut by more than 1 million they will.''

Saudi Arabia, the largest oil exporter, has declined to say whether it would take part in any output reduction. Saudi Arabia's state oil company told customers in Asia and Europe yesterday that they would receive the full volume of oil called for in annual contracts.

Aside from Saudi Arabia, most OPEC members have little extra oil production capacity. ``The rest of them are producing all out,'' Pickens said.

Natural Gas

U.S. natural gas prices this winter are unlikely to reach the record $15.78 per million British thermal units, set last December, unless the weather is severe, Pickens said. Still, they are likely to climb from where they are trading today, he said.

Gas prices have plunged by as much as 74 percent from their all-time high. Benchmark New York gas futures dropped as low as $4.05 last month. Gas for November delivery fell 4.6 percent to $6.17 per million Btu today on the Nymex. Gas futures contracts for January through March are still above $8.

``Natural gas is so tied to the weather, I think you could very well see $10 gas this winter, if you have a winter,'' he said. A mild winter would bring prices closer to $6, he said.

The decline in gas prices this year, as mild weather allowed inventories of the fuel to balloon to record levels, may translate into less supply and more demand. Gas is attractive now for some industrial customers who can switch from using oil-based fuels, Pickens said, and some producers are slowing their production.

To contact the reporters on this story: Michael McKee in New York at mmckee@bloomberg.net; Amy Strahan in Houston at astrahan@bloomberg.net.

Last Updated: October 11, 2006 14:03 EDT