Oil prices likely need to recover to roughly $70 a barrel — and stay there — before U.S. shale drillers start investing in new production, Tom Petrie said Thursday.
The chairman of investment banking firm Petrie Partners made the call on CNBC's "Squawk on the Street" after being asked to assess the view of Chesapeake Energy co-founder Tom Ward that capital markets would not open to most U.S. drillers until crude prices rebound to $75.
Drillers need access to debt and equity markets in order to invest in new production, Ward told "Squawk on the Street" last month. Oil and gas companies have slashed capital spending because crude prices have been too low to support new investment.
Oil prices rebounded 98 percent from February's 12-year low of $26.05 to a 10 ½-month high of $51.67 reached on Thursday. The rally has stoked fears that U.S. drillers, desperate for relief, will turn on the taps to get more oil — and cash — flowing, resulting in another supply-driven crash in crude prices.
U.S. output ticked up for the first time in three months last week, according to weekly production figures released Wednesday by the Energy Information Administration.