MARKET WATCH

Oil tycoon T. Boone Pickens predicts return to $100 a barrel


By Mark DeCambre / Published: Dec 2, 2014 10:37 p.m. ET


Pickens: ‘You can’t imagine how many of these cycles I have seen and endured’


NEW YORK (MarketWatch) — Prominent oil investor and sometime-renewable-energy booster
T. Boone Pickens predicted Tuesday that the plunging oil price would rebound to $100 a barrel
in the next 12 to 18 months.


Pickens also said he expects the Organization of the Petroleum Exporting Countries will
eventually move to slash oil production, possibly in the first half of 2015.


“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,” Pickens said.


The 86-year-old Pickens, who chairs the energy hedge fund BP Capital Management, offered his
forecast in an interview on CNBC’s “Mad Money” with Jim Cramer late Tuesday.


Oil price prognostication has become a new parlor game on Wall Street and in shale-oil pockets
across the U.S. Pickens, in backing his own call, alluded to his roughly 50-year tenure in the oil
industry, saying: “You can’t imagine how many of these cycles I have seen and endured.”


Pickens’s call came as oil swooned from its worst drubbing in years, hitting five-year lows after
OPEC decided to keep its production quota unchanged late last week.


London-traded January Brent crude oil LCOF5, +0.94% was off nearly 3% Tuesday at $70.54,
while West Texas Intermediate CLF5, +1.00% was down by about the same percentage at
$66.88 on the New York Mercantile Exchange.


Nymex crude last traded around $100 dollar a barrel on July 25, when it settled at $102.09, while
Brent last closed at $100 on Sept. 5, according to FactSet. Predictions for oil have been all over
the map. Some dire forecasters, like oil entrepreneur Murra Edwards, see oil prices hitting a $30-
barrel nadir, while others are predicting oil will average around $80 a barrel.


Where Pickens’s view differs from many analysts is his call that Saudi Arabia, the producer
holding the most sway among the 12-member OPEC bloc, should be willing to cut oil output
significantly. Many have viewed OPEC’s decision to stand pat on its output as an attempt to
apply pressure on U.S. shale-oil producers. And as oil prices continue to deflate, shale producers
— which tend to use a lot of debt to finance their hydraulic fracturing and oil drilling operations
— may be buffeted.


Any move to reduce output by the Saudi producers, however, would also risk their market share.


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