Oil prices plummet as U. S. shale production slows

(AGI) Rome, Dec 1 - Oil prices were in free-fall on Mondayafter hitting a five-year low following the Organisation ofPetroleum Producing Countries' (OPEC) failure to cutproduction. Light Crude futures hit 64.60 dollars a barrel,nudging a July 2009 low of 63.72 dollars, while Brent hit 67.96dollars a barrel, nudging an October 2009 low of 67.82 dollars.Oil prices later rose on the New York circuit, although shareprices remained low. Light sweet WTI (West Texas Intermediatecrude) rose to 67.20 dollars a barrel, while London Brent roseto 71.19 dollars a barrel. OPEC's strategy to keep

(AGI) Rome, Dec 1 - Oil prices were in free-fall on Mondayafter hitting a five-year low following the Organisation ofPetroleum Producing Countries' (OPEC) failure to cutproduction. Light Crude futures hit 64.60 dollars a barrel,nudging a July 2009 low of 63.72 dollars, while Brent hit 67.96dollars a barrel, nudging an October 2009 low of 67.82 dollars.Oil prices later rose on the New York circuit, although shareprices remained low. Light sweet WTI (West Texas Intermediatecrude) rose to 67.20 dollars a barrel, while London Brent roseto 71.19 dollars a barrel. OPEC's strategy to keep crudeproduction unchanged in a bid to deter countries outside thecartel from investing in unconventional hydrocarbons wouldappear to have paid off. Data passed to Reuters from thecompany DrillingInfo shows a 15 percent drop in new drillinglicences in the 12 main U.S. shale formations. InternationalEnergy Agency (IEA) Executive Director Maria van der Hoevenbelieves the plummeting price of petrol to be the first realchallenge to hit the unconventional hydrocarbon sector.Investments in shale oil are not considered profitable with oilprices below 70 dollars a barrel, and many analysts believeOPEC's decision not to alter production, which has caused shareprices to nosedive, was specifically geared to slowing the boomin unconventional shale oil that has brought the U.S. close toenergy independence. Ms van der Hoeven said the effects of theplummeting prices were difficult to predict, given that thebreak-even point varied from bloc to bloc. Producers of LTO(light tight oil) from tar sand in America and Canada wereachieving impressive results in terms of cost savings, but theoutcome remained to be seen. It was important for politiciansnot to lose sight of the overall picture, she added, andgovernments should seize the opportunity to adopt some sort ofcarbon tax and stop subsidising fossil fuels. . .