Shale oil producers, benefiting from lower costs, are expected to ramp up drilling activity if the price of U.S. oil stays near $60 a barrel, Goldman Sachs said.

“We believe that should West Texas Intermediate prices remain near $60 a barrel, U.S. producers will ramp up activity, given improved returns, with costs down by at least 20 percent,” analysts at Goldman Sachs said in a report.

U.S. drillers cut the number of rigs by just one last week, data from oil services firm Baker Hughes Inc showed, signaling that higher crude prices may be starting to steady the sector after 24 straight weeks of drill rig declines.

“Last week’s rig count is a first sign of this response and suggests that producers are increasingly comfortable,” the Goldman Sachs analysts said.

Source: Reuters