London, 14 May 2010

Oil prices are on an indefinite path higher as dwindling supplies fail to keep pace with demand, while the latest European debt-crisis is the beginning of the end for the euro, influential U.S. investor Jim Rogers said. Rogers is a famously bullish commodity investor and has repeatedly predicted a "supercycle", when raw material prices will advance for longer than in any previous uptrend.

"Oil supply is going down faster than demand, known reserves are in decline and while that continues to happen oil prices are going to go much, much higher," Rogers told Reuters in a telephone interview on Thursday.

U.S. crude oil prices hit a record high above $147 a barrel in July 2008, before slumping to below $33 in December that year. Prices recovered during 2009, despite weak demand and bulging oil stock supplies, and traded around $74 on Thursday.

Some analysts have said oil prices have been inflated by speculative trading, which is being investigated by the U.S. regulator, but Rogers said the money flows simply reflected investment opportunities in oil markets.

"If the fundamentals weren't right the price would not go up. Many people invested in commodities in the 1980s and 90s and didn't make any money because the fundamentals were bad, now people are investing and making money because the fundamentals are good," Rogers said.

Rogers, now based in Singapore, rose to fame after co-founding the now-closed Quantum Fund with George Soros nearly four decades ago. The fund returned 4,200% during the 1970s and famously bet against the British pound in the 1990s, before the UK currency crashed in the lead up to Black Wednesday.

"Euro Will Disappear"

This month the euro has come under extreme pressure following a Greek debt-crisis that threatened to spread across the continent, prompting policymakers to make available a $1 trillion rescue package, which Rogers said could spell the end for the European currency.

"It was a terrible thing to do, it ensures that the euro will disappear some day because now it means anyone can do whatever they like because they're going to be bailed out.

"I own the euro but after what they did the other day I'm having serious second thoughts. The euro will continue to corrode from within and someday we won't have a euro at all."

The euro has fallen more than 7% against the U.S. dollar in the last month and hit record lows against the Swiss franc on concerns that fiscal tightening in Europe will stunt economic growth.

The latest euro zone crisis has helped to pressure the price of some dollar-denominated commodities as they become more expensive to European buyers. But gold, often seen as a safe-haven asset has soared, hitting fresh record highs.

Rogers believes natural resource assets are a good investment because of their finite supply, leading to the theory commodities are in an extended or "supercycle" market rally.

"I certainly expect gold to go much higher over the next few years. Paper money is going to be debased and the price of real assets will be enhanced," Rogers said. "I don't see the new commodity supplies coming that will end the bull market."

As crude oil supplies decline and governments focus on more ecologically friendly solutions to global power demands, the alternative energy sector is expected to grow.

"It's (alternative energy) a good investment right now. They've got a great, great future. Someday they may end the bull market in the energy sector," Rogers said.

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