DoubleLine's Gundlach: Oil Will Hit $70 a Barrel, Helped by Saudis

U.S. oil prices hit a two-year low last week, and the trend will continue, says star investor Jeffrey Gundlach, CEO of DoubleLine Capital.

Indeed, he sees oil dropping to $70 a barrel. It has been trading around $80 a barrel.

"I'm convinced that Saudi Arabia wants the price of oil at $70," Gundlach said at an investment conference Wednesday, CNNMoney reports. Saudi Arabia has recently cut its prices for customers around the world.

Gundlach said such a price decline would do serious damage to the hydraulic fracturing (fracking) business that has helped spark an explosion in U.S. oil and gas output.

"I think it's going to $70, and if it does, it's bye, bye fracking," Gundlach noted. "Goodbye all of the great job creation from fracking, because fracking becomes too expensive if you can buy oil at $70 a barrel."

Sluggish global demand and burgeoning supply have caused the oil price plunge.

But David Kelly, chief global strategist for J.P. Morgan Funds, isn't concerned about the impact on the U.S. economy. "Falling oil prices are positive for the U.S. economy," he told CNBC. "So it is not a reason for the stock market to go down. Ultimately that's a reason for stocks to go up."

Lower oil prices put more money in consumers' pockets, and consumer spending accounts for about 70 percent of the economy. Falling oil prices also allow businesses to save on energy expenses.

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