"Just as there was no reason for oil to trade at $147 per barrel, there is absolutely no fundamental reason why oil should trade at levels below $60 on a long term basis.
(I)n my view, the long term marginal cost of production should fall within a range of $48 to $53 per barrel. If new production is required as a consequence of rising demand, long term oil prices can be expected to range from $55 to $61 per barrel.
(T)he marginal cost of production of OPEC is low, very low; the OPEC oil industry can remain profitable even at $15/barrel. The marginal cost of production from oil sands (Canada) and deep/ultra-deep water (United States, Brazil, Angola, Nigeria) is far higher and it is these which will bring new production on market. Now, the marginal cost of production for deep/ultra-deep water (main new production expected from Brazil, United States and Angola) is near enough $60 per barrel; the marginal cost of production for oil sands (Canada) is much higher. Realistically, even with a significant economic slowdown, demand growth will surpass production growth. If production growth is to come to market, oil prices must sustain over $60.
Outside of the OPEC, there is visible production able to come to market of 1 million barrels per day from United States (447k barrels), Brazil (291k barrels) and Azerbaijan (268k barrels). Brazil and United States bring new production from deep/ultra-deep water with high marginal costs of production. Azerbaijan has a lower marginal cost of production; nonetheless its source in the Caspian Sea. The Caspian is an expensive operating environment because it is land locked which makes transportation an expensive proposition; in addition because the Caspian Sea is land-locked, the cost of bringing offshore drilling equipment is high; so while cost of production is lower than deep/ultra-deep water, it is not cheap. Offsetting these visible production gains are visible production declines in the North Sea (282k barrels) and Mexico (287k barrels); on a global level, net non OPEC visible production capacity will increase by 105k barrels per day."
http://seekingalpha.com/article/108685-opec-and-production-cuts-why-now-s-the-time-to-buy?source=yahooHis main point seems to be that while OPEC can produce oil profitably at $15, then can't produce enough to meet world demand even at the reduced levels of the economic crisis. As more expensive wells are needed to meet demand, the marginal cost of rises to the $60 level of offshore wells. Oil prices below this level, as they are now, will lead to reduced production at these higher cost wells.