The nature of the U.S. shale industry makes it flexible, serving as an economically driven swing producer that can brake or speed up production based on prices. Wells are most productive when they are first drilled, and production can be cut in half after the first year, so Denery said it is easier to slow production but not drilling new wells.
"We think that we need to have even lower prices to get some reaction from the shale industry. It's true that the supply response is much higher in shale than in other areas. In order to have significant reduction in growth, we would need to have WTI in the $70 area," Denery said.
Because U.S. breakeven costs for drilling vary dramatically by region and within regions, Denery said it would be the smaller producers with the highest costs that will be the first to slow down. "Those will be the first companies that will be hurt. Those companies do not hedge, and they try to produce as much as they can because they are on the edge," he said.
In the Permian Basin, in Texas and Oklahoma, companies' breakeven averages $55 to $60, while at Eagle Ford, they average $45 to $50, he said. In the Bakken in North Dakota, there is an area with $40 breakevens, but another area averages about $55 per barrel.
Watch: Read MoreSaudi Arabia's oil fight
The levels can fluctuate within each area, and some of the higher-cost production could be as much as $70 or $75 a barrel.
Oppenheimer energy analyst Fadel Gheit said the type of oil companies most vulnerable to lower prices are those with the highest debt loads.
"Not one company so far admitted or denied that they are canceling projects, but the question is not how many producers will say they are canceling projects but the question is how many projects and which are the companies. Every company will slow down. The question is, is it 5 percent or 50 percent. It will depend on the financial flexibility and the nature of the investment," he said.
Denery has already projected growth in shale drilling will slow next year. "For this year, shale growth was about 1 million barrels. Next year, we believe a little less. From the combination of an efficiency gain and slightly lower prices, we think growth in shale will be about 700,000. If prices drop to $70 a barrel, then you might see a growth in shale of just 300,000 to 400,000 barrels a day," Denery said. "We're still going to get growth but there's going to be a reduction in growth."
Denery said demand has not yet responded to the lower prices, and he expects to see demand improve in 2015. "The demand reaction takes much longer than the U.S. shale supply elasticity. If we have a lower price in 2014 then you're going to see another maybe 300,000 barrels a day of growth," he said.
Weekly U.S. government data, due Wednesday, should show that the world is well supplied with crude and U.S. production continues to approach 9 million barrels a day, a million barrel a day more than last year. Oil inventory data is released Wednesday at 10:30 a.m. ET.
"We're looking for another big build in inventories, another 2 million plus barrels," said John Kilduff of Again Capital. "It's been massive in the last couple of weeks. It's really what flipped the term structure into contango." Contango is when futures for coming months show higher prices than the nearby prices, a bearish sign.
"I think these prices are going to remain under significant pressure into the OPEC meeting, and I think it's going to go very badly. It's going to set us up for another leg lower, possibly into the 50s in the first quarter," Kilduff said.