Opec says 50% of US shale oil production is at risk at $85.

FT: “Opec expects a sharp reduction in higher cost production such as US shale if the price of crude oil remains around $85 a barrel.
“Taking a different view to US industry executives and analysts, Abdalla El-Badri, secretary-general of Opec, told an industry conference that 50 per cent of tight oil – another term for shale – was at “risk” at current prices.
“If prices stay at $85, we will see a lot of investment, a lot of oil, going out of the market,” he told the annual Oil & Money conference in London.
However, Mr El-Badri said the impact of lower prices on supply would only be felt next year because US shale producers had hedged themselves against a sharp drop in oil prices.
After reaching $115 a barrel in June as Islamic militants swept across northern Iraq, Brent, the global oil marker, has dropped more than 20 per cent. Rising supplies from Opec and non-Opec producers and concern about slowing demand growth triggered the sell-off. US oil process have also fallen sharply.
Pessimism about prices remains widespread, with analysts aggressively cutting their price forecasts for 2015. Some banks, such as Goldman Sachs, believe the oil market will only stabilise when US shale output is curtailed.
But US industry executives and analysts say the recent drop in prices in unlikely to lead to a significant cut in US oil production.
The bulk of new US shale oil developments are economic at prices for benchmark American crude down to $70-$75 per barrel, according to Wood Mackenzie, a consultancy.
Rystad Energy, another consultancy, has calculated that providing the Brent crude price remains above $60-$65 per barrel – about $25 below today’s levels – North American shale oil output will be able to sustain the rate of about 6.4m barrels per day expected for the end of 2014.
….In other comments, Mr El-Badri said Opec’s oil production was unlikely to change much in 2015, in spite of the sharp drop in prices and forecasts of a supply glut.
“I don’t think 2015 will be far away from 2014 in terms of production,” he told reporters at the conference, adding there was nothing wrong with market fundamentals.
“We do not see much change in the fundamentals. Demand is still growing, supply is still growing,” he said. “The most important thing is we should not panic.”
Mr El-Badri’s comments will dampen expectations that Opec might agree to lower production when it meets in Vienna next month. Opec crude production has averaged just over 30m barrels a day this year. The cartel has not cut output since the financial crisis in 2008.”