As you know, I’m a CNBC junkie and Boone Pickens was on Thursday and gave his perspective on the oil and gas prices. As I’ve stated some CNBC commentators think the Saudis are trying to kill fracking in America. On Thursday, the price of oil closed at $84.06.
Boone thinks the price of oil will go below $80, but not below $70. The price below $80 will cause some consternation at the E&P Companies. Boone does not think the Saudis will do anything until the November OPEC meeting where a decision will be made as to whether the Saudis will cut production and support the price or keep production up and drive the price down.
The second option to keep production up will to squeeze the E&P Companies. We’ll have to watch to see how the E&P Companies will respond. There are 1922 rigs drilling in the U.S.; around 1600 are drilling for and the remainder for gas. Will rigs be laid down or will they switch to gas or will they keep drilling for oil?