Tags: Saudis | oil price | panic | crude

Breitling Energy's Faulkner: Saudis Won't Hit 'Panic Button' Until $40

By    |   Sunday, 28 December 2014 01:04 AM

Oil prices have plunged 48 percent in the last six months, hitting a five-year lows earlier in December.

And Saudi Arabia has rejected the idea of cutting its oil production from 30 million barrels per day, content to let the price drop drive other producers out of the market.

But at some point even the Saudis would have to cry uncle, says Chris Faulkner, CEO of Breitling Energy. "I think the panic button is at $40," he told CNBC. "They can say whatever they want, but at the end of the day, they can't just bleed out money forever."

Brent crude oil traded at $60.11 a barrel Friday morning.

Economists project a $50 billion budget deficit for Saudi Arabia next year, so a further decline in oil prices will make it difficult for the government to continue its subsidies, Faulkner said.

In any case, he sees oil dropping into the low $50s, perhaps in the second quarter, and then recovering to the low $70s by the end of 2015.

Legendary energy entrepreneur T. Boone Pickens predicts Brent will rebound to $90 to $100 in 12 to 18 months, but Steve Beaman, chairman of the Society to Advance Financial Education, tells Newsmax TV, that the legend has it all wrong.

Pickens is just "talking to the futures traders hoping to get them to bid the price back up," Beamon tells the network's "MidPoint" show.

Officials from OPEC nations have recently talked up the idea of oil prices stabilizing around $80, Beaman notes. But "all of that doesn't take into account that it was just released that the United States has only 10 percent of the world's shale oil capacity," he says.

"In South America, they just discovered a great, big shale oil reserve. Supplies will keep coming online, keeping that price a lot lower than $100 a barrel."

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Oil prices have plunged 48 percent in the last six months, hitting a five-year lows earlier in December.
Saudis, oil price, panic, crude
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2014-04-28
Sunday, 28 December 2014 01:04 AM
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