Pickens: Oil Going to Remain Above $100 a Barrel

The oil patch's most famous investor admits he got it wrong.

Just weeks after predicting an imminent slide in oil prices, Boone Pickens now sees the price of a barrel of oil holding around $100 for the rest of the year.

AP Boone Pickens

"I thought oil in the second quarter could come off $10, but I don't think that's going to happen," he told CNBC's "The Call.""In the second half, you're going to see oil above $100."

Pickens sees it as a matter of supply and demand. 

"Demand is off, but supply is still 85 million barrels a day, globally," he explained.  "You've got the Chinese and other markets around the world that want the oil, need the oil, and demand's going up and you're still capped off at 85 million supply."

U.S. crude futures hit a record $111.80 last Monday, but have dropped steeply since then, and dropped below $100 on Tuesday morning.

Pickens thinks it's a mistake to follow daily price changes too closely.

"I can't play day trades, whether it's down one day, up the next, the volatility just eats my lunch," he said. "I've got to make a far-out play and stick with it."

He repeated his recent change of heart about alternative energy.

"We're spending about $1.5 billion a day -- $500 to $600 billion a year -- on imported oil," he noted.  "That's four times the cost of the Iraqi war. We can't continue to do that. In 10 years you will have transferred wealth from the United States to the producing countries of about $5 or $6 trillion. That won't work. I'm not sure what it's going to do to us to remove that much wealth out of this country. We have got to get on alternative fuels in the United States. That's all there is to it."

Pickens says he's bullish on natural gas as well as oil, and he has a portfolio to prove it.

"My...picks for natural gas would be Cheaspeake , Exco, Sandridge , and , if you're going to play the natural-gas fueling deal, you'd go to Clean Energy Fuels on the Nasdaq," he said.  "If you're going to play oil, on the domestics, I would say that Continental Resources and Denbury are the two best, plus Suncor , the Canadian oil-sands one. Those are all in my portfolio."

In fact, Pickens is the largest shareholder in Clean Energy Fuels.

© 2008 CNBC.com