(EnergyAsia, October 17 2014, Thursday) — Oil prices rebounded sharply on the overnight markets as traders closed out their positions ahead of the expiry of crude options and futures contracts in New York and London.

North Sea Brent crude skidded to a near four-year low of US$82.60 a barrel on Wednesday before surging to a high of US$85 while US WTI reached a high of US$84.83 after plunging below US$80 for the first time since June 2012.

Despite rising geopolitical tensions around the world, oil prices have been retreating since June on account of the shale boom in North America, recovering production in Libya, slowing economic growth around the world, and Saudi Arabia’s determination to drive down prices by refusing to cut production.

US oil production has risen by nearly four million b/d since 2008 while war-torn Libya is on course to supply more than one million b/d by year-end, sharply higher than the 200,000 b/d level that was predicted earlier in the year.

If prices continue to hover at current levels or go lower, analysts warn North America’s shale boom could come under threat. Many of the companies are heavily-geared, having borrowed to develop and produce shale-based hydrocarbons on the assumption of crude holding at US$80 to US$85 a barrel.