Oil prices dropped for the fifth-straight session on Wednesday over concerns about higher prices leading to more production.
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Despite U.S. oil prices hovering just under $50 per barrel, former Shell Oil President told the FOX Business Newtork’s Stuart Varney he’s “pretty bullish” on $80 per barrel oil by the end of the year.
“Sometime in the fall, it could be in October [or] November, the Russians and the Saudis have got to get a grip on reality that they cannot face 2017 with the same collapse in their budgets… they are going to have to do something and the best thing for them to do, because they are so oil dependent, is to let the price of oil rise further,” he said.
Meanwhile, according to the U.S. Energy Information Administration, crude stockpiles fell last week by 933,000 barrels to a total of 531.5 million barrels. It was the fourth-straight week of declines.
While these numbers were lower than Wall Street expected, Hofmeister said U.S. oil prices are far from heading back to their all-time highs.
“In order to even stabilize production in the U.S. we would have to double today’s rig count. We are down to about 370 rigs that are drilling for oil. That’s down from about 1,400 rigs… It’s more than cut in half, it’s down to about 70 percent and so when you’re looking at that much decline in production -- and remember a lot of the companies are filing for bankruptcy right now, they are not going to be around to resume drilling,” he said.