CastleArk Management President and CIO Jerry Castellini told “Power Lunch” that he isn’t too worried about Chevron’s dividend at the moment.
“If we don’t have a price action on the upside, they’ll clearly have to dramatically reduce capital spending if they don’t want to borrow to pay that dividend,” Castellini said.
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If oil prices rebounded, big oil companies would be less pressured to cut capital expenditure or dividends. Both Castellini and Molchanov are optimistic and believe that the market will see a rebound in oil in 2016.
“Oil prices at $30 are completely unsustainable … Saudi Arabia is running $100 billion budget deficit. It’s not something that can last forever,” said Molchanov, adding that he sees a “$60 minimum by the end of the year.”
“My suspicion is we’re going to get the relief on oil prices well within the next six months. The entire global economy now depends on that,” Castellini said.