Falling oil prices are cutting into U.S. producers’ profits, but analysts say the industry can weather the storm.
December 3, 2014 World oil producers have put oil prices into a free fall, refusing to pare back global supplies in the hopes that low prices will derail the fracking-backed production boom in the U.S. and preserve OPEC's power over world energy markets.
But global analysts are skeptical that the move will work.
The basic reason: Prices remain high enough to keep pumping. "Looking out there, it seems like there's a huge amount of oil that can be produced at $60, $70 per barrel," said Michael Lynch, president of consulting firm Strategic Energy and Economic Research, referring to the prices for Brent crude oil, a global reference point.
Oil prices fell to five-year lows in recent days before rebounding slightly. Brent crude oil is trading at around $70 per barrel, far off the $110 range reached over the summer, while West Texas Intermediate, or WTI ,the main U.S. benchmark, is currently trading in the $67-per-barrel range.
That doesn't mean that the move by OPEC—a 12-nation cartel of oil exporters dominated by Saudi Arabia—won't...