Tags: Pickens | oil | rig | supply

T. Boone Pickens: Brent Crude Oil Will Hit $90 to $100 Within 18 Months

By    |   Tuesday, 23 December 2014 10:59 AM

Oil prices may have dropped 47 percent over the past six months, but that plunge will prove to be temporary, says legendary energy entrepreneur T. Boone Pickens, founder of BP Capital Management.

He told CNBC that Brent crude oil will snap back to $90 to $100 barrel in 12 to 18 months. "The world got along fine with $100 oil."

That $100 price would represent a 64 percent increase from late Tuesday's level of $57.12.

"The thing that has not been focused on is demand is down. The demand for the world was another 1.3 million [barrels] this year, and half of that is what we got," Pickens noted.

Oil supply is booming now, thanks largely to record production in the United States. "The oversupply for oil has come from the United States," he said. But the price drop will lead to a sharp decline in production.

"Just watch the rig count. You have 1,500 rigs running on oil. Already you have dropped 75 rigs in the last three weeks." Drillers should "go ahead and accept it," Pickens argued.

Matt DiLallo of The Motley Fool
also says oil can rebound quickly.

Without any action by OPEC, the global market will face oversupply of 1 million to 1.5 million barrels of oil per day next year, he wrote in an article for http://www.fool.com/investing/general/2014/12/18/why-the-oil-price-plunge-could-be-short-lived.aspx. "However, the supply and demand situation could shift the other way rather quickly, driving the price of oil back up before too long."

Demand wouldn't have to rise much to erase the glut, DiLallo argued. "Just maintaining the current global demand growth trajectory would require 7 million additional barrels of oil per day of supply by the end of the decade."

On the supply side, "if not for surging U.S. oil supplies, we'd probably be in a whole lot of trouble, as global oil supplies from several key producing regions have steadily fallen," DiLallo noted. And that dynamic should continue, he says.

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Oil prices may have dropped 47 percent over the past six months, but that plunge will prove to be temporary, says legendary energy entrepreneur T. Boone Pickens, founder of BP Capital Management.
Pickens, oil, rig, supply
324
2014-59-23
Tuesday, 23 December 2014 10:59 AM
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