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Bloomberg

Slumping oil prices over the past week reflect a growing consensus among traders and investors that OPEC will maintain output when its 12 members meet later this month, Goldman Sachs Group Inc. said.

Brent crude, used to price more than half the world’s oil, dropped below $80 a barrel in London for the first time in four years yesterday. Members of the Organization of Petroleum Exporting Countries including Saudi Arabia will let North American shale producers cut output first in response to the collapse, relinquishing their traditional role of “swing producer,” said Jeffrey Currie, the bank’s head of commodities research.

“People recognize you’re unlikely to see a cut at this November 27 OPEC meeting,” New York-based Currie said in an interview on Bloomberg Television’s “On the Move” with Jonathan Ferro. “When we look at the strategic case of Saudi Arabia and OPEC against the shale environment, we should expect to see OPEC be a second mover.”

Oil has collapsed into a bear market amid signs that OPEC’s biggest members will refrain from curbing a glut generated by booming U.S. shale production and slowing growth in global demand. Analysts remained split on whether the 12-member organization will announce a production cut when it meets in Vienna later this month, a Bloomberg survey last week showed.

Brent crude has fallen 4.5 percent this week, trading at $79.61 a barrel in London today. West Texas Intermediate was at about $76.87 a barrel in New York.

WTI futures, the U.S. benchmark, won’t fall below about $60 a barrel because this is the minimum needed to cover U.S. shale production costs, Currie said. Investment by drillers will be “slashed” if WTI falls into the “low $70s,” he said.

U.S. shale production is “continuing to surprise to the upside,” adding more than the equivalent of Libya’s total production every year, Currie said. Still, “shale is OPEC’s friend” because the relatively high cost it requires provides a floor for prices, he said.