Oil firms set to keep pumping, but not investing

LONDON (Reuters) – Oil prices have a long way to fall before producers start to lose money and shut in fields but even prices around $50 can choke investment and lead to a supply crunch before the global economy recovers from recession.

Oil has dived from a record of almost $150 a barrel in July to around $50 now, but so far the only supply cuts have been output reductions from OPEC as it attempts to halt the slide.

Prices would have to drop much further before they fail to meet operating costs, and force wider shutdowns.

“For the bulk of production you can get down into the $20s or even the teens,” said Mike Wittner of Societe Generale.

Even the most expensive crude, squeezed from Canada’s bitumen-soaked oil sands, is profitable at current price levels, provided the field is up and running.

Reuters