Pickens: Oil Will Rebound to $70 by Year-End

Oil has plummeted 60 percent since late June, falling to a six-year low of $42.75 a barrel Thursday amid sluggish demand and bountiful supply.

But legendary energy entrepreneur T. Boone Pickens doesn't think the bad times will last for black gold. In an interview with CNBC, he predicted a price of $70 by year-end and $80 to $90 within 18 months.

Given that U.S. oil output and inventories are at more than 30-year highs, what's behind Pickens' forecast?

A plunging rig count in the United States will help spark the rebound, putting supply and demand in better balance, Pickens explained. The rig count totaled 866 last Friday, down 41 percent from a year earlier and 6 percent from a week earlier, according to Baker Hughes.

"We produced too much oil, and now supply is greater than demand," Pickens said. But with the rig count dropping, "we are getting ready to balance the market."

Meanwhile, we can thank Saudi Arabia for much of the oil price plunge, according to Richard Fisher, president of the Dallas Federal Reserve. "The Saudis have engineered" the move, he said in a speech last month, CNNMoney reported.

Saudi Arabia led OPEC to reject production cuts, and the nation has offered price reductions to its customers. Presumably the Saudis are trying to drive high-cost suppliers, such as U.S. shale oil producers out of business.

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