"Our view is it doesn't go a lot lower at this point. The Saudis have to start burning savings to pay for government expenditures, or else they have to cut back some spending. We are working under the assumption that we're going to see some reduction in volumes if prices drop any further from here. That should help rebalance the market meaningfully," said Francisco Blanch, head of global commodities and asset allocation research at Bank of America Merrill Lynch.
Blanch said the lower prices will start to hurt high-cost producers, including some U.S. producers, and that will bring down prices. He also said there should a pickup in demand in the next few months.
For the month of October, U.S. production stood at 8.9 million barrels a day, and this is the first report of a 9 million-plus production rate since the shale boom began. The highs for U.S. production were the 10 million barrel a day levels in the 1970s. Just six years ago, there were weeks where production was less than 4 million barrels a day.
Brent futures Thursday tumbled more than 3.4 percent to $78. Brent was off more than 3.4 percent, and West Texas Intermediate slumped $2.97 to $74.21 per barrel. Brent has fallen nearly 7 percent so far this week.
Read MoreOPEC feeling pain as oil falls to 4-year low
Traders have been reading the signals from Saudi Arabia, the biggest OPEC producer and world's largest oil exporter, as bearish for oil prices and the first comments from Naimi confirmed that. But falling prices had stirred speculation OPEC would be forced to cut production to boost prices, a course favored by some members.
Blanch said the market though has adjusted its view about OPEC in the last several days and now expects no action. He said the market expected "that they would protect an $80/$85 floor for oil, that's what the market was assuming, and in the last couple of days having listened to the Saudi oil minister, the market keeps selling off,"
Saudi Arabia, which produces about 9.6 million barrels a day, can have a major impact on prices if it shifts production. But analysts say it would want other producers to share any production cuts so it can maintain its dominant market share—an increasingly important position to hold on to as other producers look set to add more oil into the world market in coming years.
OPEC reported this week that its production fell in October, narrowing the gap between its production and quota. The cartel said its collective crude production fell by 226,400 barrels a day to 30.25 million barrels, and that the Saudi output fell by about 69,900 barrels a day.
Read MoreWild ride for natural gas signals volatile winter ahead