Oil prices have been volatile this year, and they've cratered into a dangerous zone that threatens profitability for producers, a top energy investor said this week.
Dwight Scott, executive vice chairman of Quantum Capital Group, told Bloomberg TV this week that at the rate prices are going, they are "dangerously close" to no longer being profitable for producers.
US crude prices are down about 8% this year, trading at $66.68 Thursday morning.
"In the mid-$60s, you get dangerously close to where oil prices don't really drive appropriate returns for new drilling," he said, adding that the industry's rig count has been off for the past two months, referring to the number of active drilling rigs in one area.
In the interview on Wednesday, Scott addressed the oil industry's supply and demand dynamics, laying out what he sees for the future of the industry. President Donald Trump's election was seen as a bullish indicator for the oil and gas sector early in the year but so far, prices have been subject to volatility amid economic uncertainty and high global supply.
Scott added that Trump's drill baby drill" mantra has mostly been moot, as the industry in the US has already been pumping record amounts of crude in recent years. That's part of the reason US producers have been hesitant to keep flooding the market with oil, as even more supply could further depress prices.
Scott said that he believes that the streak of declines is related to uncertainty surrounding President Trump's tariffs. He added, though, that he believes the slump should be temporary, predicting that the US will continue to be a top energy producer.
