Oil prices hit their seven-year lows on Monday, but oil bull T. Boone Pickens is standing by his $70.00 oil forecast.
Oil prices have continued to tank as one OPEC (Organization of the Petroleum Exporting Countries) meeting after the other runs aground. Contrary to what the oil market was hoping, OPEC members have, once again, decided not to cut oil output in fears of losing their market share to the western oil companies. But Pickens is hopeful that this price rout is short-term and prices will pick up some upward momentum in the long run.
Icahn thinks oil will go up, but he doesn’t want to put a time on it. He says he’s hedged against oil, but he is still losing because of the millions invested in it. Pickens, in Icahn’s view, will sooner or later be right about his call on oil prices, but it’s all about timing right now. Pickens, on the contrary, isn’t shy about putting a timeline on his forecast, predicting a six-month interval after which he expects a rebound.
“Yeah, the oil has to come up because the supply is going down. And when you look at what’s happened, it [oil] has got hurt. And the reason that happened is that the Saudis wanted to nail the U.S. producers, because we’re the ones who oversupply the market.
“They [the Saudis] wanted to stop all that. They don’t quite get it, how the thing works, but they [U.S. shale companies] did, because you went down from 1, 609 rigs down to 514 rigs and when you did, that took out half a million barrels a day off of 9.6 million barrels, and in about another six months, you’re going to take another half a million barrels off, with rigs not working.”
Pickens has previously criticized the Obama Administration for not having a long-term energy strategy in place that could insulate the country’s oil investments from international headwinds. In their candid discussion, the two business magnates also discussed the likelihood that Russia and Saudi Arabia may join hands to drive out U.S. competition by keeping prices low, eventually hiking prices once the coast is cleared.
“[…] I can’t believe that Obama doesn’t say, ‘Look what I did. I got oil prices down, the economy is up, everything is great, and I screwed the oil companies on the side.’ I can’t believe he doesn’t do that and he doesn’t ever say anything. He doesn’t understand anything about the industry.”