T. Boone Pickens sees oil back to $70 a barrel by year-end
LAS VEGAS (MarketWatch)—Energy tycoon T. Boone Pickens says the drop in U.S. oil rig counts will keep a recent rally in crude prices alive, pushing prices to $70 a barrel by the end of the year.
Speaking at the Skybridge Alternatives, or SALT, hedge-fund conference, Pickens said the closing of around rigs (848 have closed according to Baker Hughes) over the past year as oil plunged to multiyear lows would inevitably cut supply, has ensured that crude inventories have peaked.
It isn’t just that drillers are holding back. Bankers are also nervous, Pickens offered, and that will restrain production as well.
Pickens said the demand picture is a big factor in oil retracing its steps higher, and described appetite for crude oil as very, very strong in contrast with a weak demand picture last year.
Oil futures tanked in the second half of 2014 and saw continued weakness early this year, cratering more than 50% from a peak above $107 a barrel in June for West Texas Intermediate. A growing glut of U.S. oil, weak international demand and the Organization of the Petroleum Exporting Countries’ refusal to trim production were seen as the primary culprits.
Oil has recently clawed back a chunk of those losses. June crude oil CLM5, -3.36% which had zipped past $60 a barrel in recent days, was at $58.80 a barrel in electronic trade on Globex Thursday. That is down from the settlement price of $58.94 during the regular session on the New York Mercantile Exchange.
Pickens founded independent oil company Mesa Petroleum in the 1950s. In the 1980s, the Texas wildcatter rose to fame for a string of acquisitions that garnered him a reputation as a corporate raider.
Pickens, 86, reiterated his support of the Keystone XL oil pipeline and offered up some partisan one-word assessments of the current presidential field. “Loser,” is how the oil tycoon described 2016 Democratic presidential-nomination front-runner Hillary Clinton to moderator Stephanie Ruhle of Bloomberg Television.
Pickens offered the same view of President Barack Obama, while describing former Florida governor and Republican hopeful Jeb Bush a “winner.”