“Lower for longer is the new way of looking at oil,” according to Oppenheimer managing director Fadel Gheit.
In an interview with FOX Business Network’s Maria Bartiromo, Gheit said the new normal for oil prices will be between $65 to $75.
“At the end of the day the market will come to an equilibrium that will give us between $65 to $75 … Investors, oil companies will have to adjust to the reality that $90 oil is not around the corner and $30 oil is an aberration. It could last for a day or two, but it’s not going to last forever because the marginal cost for production is close to $50, so companies are not going to invest to break even,” he said.
He also predicted that 4 million barrel a day oil production is here to stay.
“Wishful thinking is not strategy, companies, they are all hopeful oil prices will go to $90 but guess what, you’re forgetting that we are producing 4 million barrel a day of shale production -- and it’s here to stay no matter what OPEC does… because these companies can dial down and can dial up, they can increase capital spending because the response time now is two weeks. It’s not building a platform offshore that will take you 5 years. So that is why we are entering a new phase if you will,” he said