More than 50% lower.
That is how far Canadian billionaire Murray Edwards, chairman of Canadian Natural Resource, thinks oil prices can fall from here.
Speaking with Canadian business publication Financial Post, Edwards said, “Prices could spike down to $US30, $US40. It got down to $US35 in 2008, for a very short period of time.”
Edwards told Financial Post’s Claudia Cattaneo that, “On a given day you can have market fluctuations where prices fluctuate far more than the underlying economic value of the unit,” adding that if oil falls to $US30 or $US40 a barrel he doesn’t expect it would stay that low.
“The better question is where does it stabilise, and that $US70-$US75 area is probably not a bad place to stabilise for a period of time until you get more balance in term of growth in demand and some supply response,” Edwards said.
On Friday, West Texas Intermediate crude prices settled at around $US66 a barrel, about $US8 a barrel below where they started the week, as Thursday’s announcement from OPEC that it would not move to cut production sent prices tumbling.
Edwards also told Financial Post that drilling projects that are underway and have a longer-term horizon will likely continue, but future projects could be shelved due to the recent declines.
Edwards said that Canadian Natural Resource will reduce its capital expenditures next year.
Shares of Canadian Natural fell more than 9% on Friday amid a massive sell off in oil stocks following the plunge in crude oil prices.