Pickens On CNBC: No Panic-Oil Prices Will Go Up
He's Boone Pickens--he's CEO of the private equity firm BP Capital--and he's a major "player" when it comes to oil (he has an estimated worth of $2.7 billion). He called in to "Squawk Box" this morning to talk about the falling price of crude.
A little background before we get to what Pickens said. The price of crude is down 16% since the first of the year--and is hovering now around $50 a barrel. The oil minister of Saudi Arabia has said he doesn't see a need right now for OPEC to cut oil production (more on this from Pickens).
The fall in the price of crude has largely been blamed on warmer weather in the U.S. especially in the northeast section. But much cooler temperatures have hit most of the country--and analysts say the demand for oil should rise--and that could increase the price of crude.
Now to Pickens. He thinks "we've reached the bottom" when it comes to crude oil prices. He believes oil should be averaging a price of around $70 a barrel through 2007. Pickens said he's not "predicting" prices per se--but he believes it's only about 2 weeks into 2007--and there's plenty of time for crude prices to rise. Pickens said he's not surprised by the fact that prices are falling--but rather the depth of the fall.
As for OPEC and production cuts--and interesting statement from Pickens. He said his sources told him today that the Saudis may have already done some cutting--about 200,000 barrels a day down from their normal production of 9 million a day. Pickens said they probably did this in the last 30 days. He wouldn't name his source--but said it's one of "his people."
As we mentioned in our earlier post--the Wall Street Journal interviewed Pickens today (subscription required) and in the article he talked about some recent losses and gains. He confirmed them on "Squawk." His hedge fund made $1.8 billion in natural gas in 2006--while he lost some $600 million on crude oil. That turned out to be a $1.2 billion profit. Pickens said that made 2006 his second best year--with 2005 being his best yet in oil.