Oil tycoon T. Boone Pickens cashes out of crude as worst market in decades drags on

Oil tycoon T. Boone Pickens, who made and lost fortunes targeting some of the largest U.S. explorers over the past 40 years, has cashed out because the worst crude market downturn in decades drags on.

Pickens who has sold all his oil holdings and is waiting for the best moment to get back in, he said Thursday within an interview on “Bloomberg Go.” With prices low, mid-size U.S. oil companies such as Pioneer Natural Resources Co., Anadarko Petroleum Corp. and Apache Corp. are acquisition targets for bigger firms like Exxon Mobil Corp., he said.

I won’t re-enter until starting to draw on inventories. This is a key point

Crude prices have slumped 70 per cent since June 2014, leading the oil industry to get rid of a lot more than 250,000 jobs and slash over US$100 billion in spending in the last year, with increased cuts expected this season. The reductions should lead to a drop in oil production, which would boost oil prices back to the US$50-$60 range by the end of the year so long as the economy doesn’t enter an economic downturn, Pickens said.

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“The low is within,” he said. “Just don’t get in a hurry here. You’re going to have plenty of opportunity. The market is going to be volatile. it will not go upright, so there will be good entry points.”

West Texas Intermediate has rebounded 22 per cent since touching a 12-year low of US$26.19 a barrel on Jan. 20.

Pickens started reversing course in the third quarter by slimming down his energy holdings and selling several stocks he’d bought just 3 months earlier, based on data compiled by Bloomberg.

Pickens won’t start investing again until crude inventories start to fall. In the U.S., commercial stockpiles have risen in 16 of the past 19 weeks and today stand at more than 500 million barrels the very first time since 1930, at the height from the East Texas oil boom.
“I will not re-enter, I’m certain, until we start to attract on inventories,” Pickens said. “That’s a key point.”

Bloomberg.com