Technological advances and deflationary pressure from the downturn have resulted in an 8-percent drop in global average unit production cost to US$30 per barrel of oil equivalent in 2016, which implies that the industry needs the price of oil at US$45 to break even in aggregate, according to a Bernstein Research survey of the 50 biggest listed global oil and gas companies.

Global marginal cost, that is, the cost to replace reserves, for non-OPEC oil producers dropped by 12 percent annually to US$63 per barrel in 2016, according to the survey, as carried by Oil and Gas Investor. The marginal cost now equals the breakeven point from 2006 and is down a massive 40 percent since the peak from 2013, Bernstein analysts, led by Neil Beveridge, say.

The global marginal cash cost of production—representing the floor under oil prices below which it is not profitable to produce a barrel, dropped by 8 percent to US$28 per barrel last year.

The reduced costs for production were mostly driven by a 29 percent annual drop in exploration costs, an 11 percent decrease in production costs, and a 14 percent decline in Selling, General and Administrative (SGA) costs, according to the survey.

The North American shale patch producers were the champions in cost reductions, while national oil companies (NOCs) saw costs grow as “resource complexity and depletion continues to push up production and development costs,” Oil and Gas Investor quoted Bernstein analysts as saying.

With the higher oil prices this year compared to last year, cost cutting is expected to bottom out and in some places—increase.

“We suspect we’re getting close to the bottom of the range in what’s possible, although there is certainly no indication of a return to rampant inflation, either,” according to Bernstein.

In the shale patch, for example, oilfield services costs are expected to increase, potentially slowing down the drop in breakeven costs.

The United States Oil Fund (NYSE: ) LP ETF (NYSE:USO) closed at $10.28 on Friday, up $0.24 (+2.39%). Year-to-date, USO has declined -12.29%, versus a 8.13% rise in the benchmark during the same period.

USO currently has an ETF Daily News SMART Grade of C (Neutral), and is ranked #53 of 127 ETFs in the Commodity ETFs category.