Oil prices are “definitely in a lower-for-longer environment,” but crude will still nearly double from current levels by late 2016, the CEO of Hess Corporation says.
“By the end of next year, I think the price will start moving up as supply growth starts to retard [and] demand goes up,” John Hess told CNBC’s “Squawk Box” on Friday. “All of a sudden the market is going to draw on inventories, and you’re probably going to be looking at least at $60 by the end of next year.”
U.S. oil prices, as measured by West Texas Intermediate crude, were flat Friday after losing 1.6 percent Thursday to settle at $34.95 per barrel. That’s their lowest levels since February 2009. Since a peak in June 2014, prices have cratered about 65 percent.
Goldman Sachs is standing by its prediction that crude will eventually bottom at $20 per barrel — a level bank researchers said would force companies to finally make the deep production cuts necessary for the market to start recovering.
Read MoreGoldman Sachs expects oil prices to fall further
Like Goldman, Hess blamed OPEC’s refusal at its recent meeting to cut production as a major headwind for the market.
Hess and Goldman also pointed to supply concerns about Iran’s eventual re-entry into the oil market as part of a deal to limit its nuclear development program
Putting the oil drop in perspective, WTI hit an all-time high of just over $145 per barrel in July 2008, before plummeting in the wake of the financial crisis. Prices fought their way higher to break above $100 in February 2011 and largely remained above $75 until late 2014.