How low must oil prices fall to choke off shale supply?

Although $60 per barrel is a fair long-run estimate, there is no single “magic number” for the oil price below which enough North American production becomes unprofitable for supply cuts to start to bite. Indeed, short-term operating costs for many US shale firms may be as low as $10-20pb. We continue to expect the price of Brent to find some decent support at around $60pb, partly due to recovering demand. But even over the longer term, falling costs in the shale industry and the development of other sources of supply could allow prices to remain around the current lower levels for years to come.