By Adam Galas
. . . T. Boone Pickens thinks oil is going back to $100 a barrel:
“They didn’t say they wouldn’t cut, but OPEC will have to cut, and that is what’s going to happen. The Saudis are the ones that make the cut. They can take $70 oil and take it out 10 years — they have the cash reserves that allow them to do that. But they can’t do that to the rest of OPEC. . . .”
On one hand, oil could soar
One of the primary causes of the current oil crash is the result of a 1.1 million barrels per day oversupply of oil . . .
. . . all petro states’ budgets are currently hemorrhaging red thanks to crude prices being far below the prices required to balance their budgets. . . .
Meanwhile, . . . with many U.S. oil producers slashing their 2015 drilling budgets and oil drilling rig counts already starting to decline, . . .
On the other hand, oil may stay cheap
Then again, . . . there are reasons to believe oil prices may remain low through all of 2015 or even longer.
For example, . . . U.S. oil production is still likely to increase in 2015 from oil projects coming online that have already been paid for. That locked-in production gain is even likely to continue at current oil prices of $50 per barrel since many small oil producers are over levered with debt and in desperate need of cash flow. Thus, they are unlikely to turn off the oil taps on wells that are already paid for and producing.
Read the full article here.