The Toronto Stock Exchange's benchmark index will breach 15,200 this year, thanks to unexpected strength in energy prices, which has little to do with market speculation or weakness in the U.S. dollar, says CIBC World Markets chief strategist Jeff Rubin.

The target represents a 700-basis-point increase over CIBC's previous target for the S&P/TSX composite index, and is based on a crude market stronger than CIBC had earlier forecast.

"I'm not saying there isn't speculation," Rubin said in an interview, "but speculation is just a footnote to this market."

Rubin said oil's surge past $130 a barrel may have more to do with the impact of the recent earthquake in China on hydroelectric capacity than hedge funds driving up futures contracts.

"China is a country where when they get into coal problems or hydroelectric problems they still burn diesel to generate electricity . . . when you're burning $120-a-barrel oil to generate power, that's an act of desperation, not speculation."

And while much of crude's rise has also been attributed to declines in the U.S. dollar, Rubin said, "even if denominated in a trade-weighted basket of world currencies, the price of oil would still have risen to over $100 US a barrel."

Meanwhile, despite this year's surge in the value of Canadian energy stocks, they still have considerable room to move, Rubin said. At current prices, the market is pricing energy companies as if they were selling crude at $85 to $90 a barrel, and not the $127.79 it closed at Thursday.

For that reason, Rubin said, CIBC was adding another two percentage points to its weighting in energy stocks, bringing the recommended allocation to 38.6 per cent of its equity portfolio, which is seven percentage points above the index. At the same time, CIBC reduced its fixed-income weighting by two percentage points and its weighting in interest-sensitive utility stocks by one percentage point. This relates to its expectation that North American interest rates will be moving up next year -- even if the Bank of Canada has one more rate cut left -- to combat rising inflation. CIBC expects the U.S. Federal Reserve to lift rates by two percentage points and the BoC by one percentage point.

West Texas Intermediate, the benchmark grade for the global oil trade, has averaged $107 as barrel so far this year, and "should easily meet out $115 US a barrel annual average target," CIBC said.