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.