The Saudis sure are desperate for cash. The drop in oil prices really hurt them, especially since around 80% of its income is dependent on oil sales. Talk about stuffing all your eggs in a hole in the sand and sticking your head in it too. They've already tried to lower the production but they can only raise prices up to a certain point. China's economy is slowing down and it's reducing demand. That KSA have a booming young population and that most of the jobs are in government AND related to oil also isn't helping them.
They can't increase the prices beyond a certain limit. The American shale oil producers have cut their production costs to $30 to $50 per barrel (depending on the geological formation). If the prices stay at $55 per barrel for a long duration, then the shale oil producers will flood the market with their crude.
Exactly, any attempt to have it hit the roof would also benefit the US. Also, currently the market can only tolerate a certain increase in price. Seems it's quite sluggish these past few months.
The cost of crude oil extraction in the United States has come down, as new technology (such as horizontal drilling) is being used. Any increase in the crude oil price above the current levels will trigger a strong correction in the near future.
