Oil Prices a Long Way Off From Stalling U.S. Production

It would take a drop in crude prices to about $50 a barrel before U.S. oil production growth would be choked off.  That’s the finding in a new report from Citigroup energy analysts. They said the two-year low in U.S. oil prices is not yet stalling growth of U.S. crude production, and even at $70 per barrel, the industry would continue to increase production.

It would have to fall to $50 or even lower, to fully halt shale production growth, the report said. At a level of $40 to $60 a barrel, production growth would fall toward zero as producers shut less productive wells. Citi said, in fact, this break-even price could get lower over time as producers focused on more intensive drilling in more productive areas.

The rapid growth in U.S. oil production has been a sore point for OPEC and other producers, as it has contributed to a glut of supply in the Atlantic basin at a time when global demand growth continues to slide. West Texas Intermediate futures briefly fell below $80 a barrel Thursday, a new two-year low.

CNBC

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.