opec production

The theme for Thursday is big players adjusting to a changing world: Citigroup is shutting down a major hedge fund it used for soon-to-be-banned proprietary trading, Goldman has been subpoenaed over its role in the subprime mortgage crisis, and OPEC is thinking that it might need to pump more oil.

With an oversupply of oil on the market and OPEC afraid that higher prices will impair the U.S. recovery and sap demand, the fundamentals point to an oil price drop in the near term. Yes, markets move on emotion, and fears about unrest in Egypt have reversed that downward price trend, but the drop is probably coming.

As crude prices keep inching upward, the threat to both the U.S. and global economy is clear. While OPEC says don't blame us, the Interational Energy Agencys says: "This is a wake-up call to the oil-consuming countries and to the oil producers."

Oil prices kept rising this weekend as a blizzard smacked into the Eastern Seaboard of the U.S. and as OPEC's Arab ministers met in Cairo to discuss strategy. Their call is for production to stay at current levels, which will help keep the upward pressure on prices.

Some OPEC members want oil prices to rise to $100 a barrel to offset the decline in the dollar. The value of the dollar, which has slipped 13% since June against major world currencies, means that the "real price" of oil is about $20 less than current levels, Venezuela's Energy and Oil Minister...

Crude oil prices moved above $83 Monday -- from just above $70 only two months ago. There are a number of causes for the increased price of crude, among them the growth in demand for oil in China.

In OPEC's June report, released today, the oil cartel doesn't see global demand changing much. It's sticking with its 0.9 million barrels per day increase (1.1%) for the remainder of 2010. It notes that demand rose a "marginal" 0.4 mbd in the first quarter, so it's already trending a bit behind its yearly forecast.

The Organization of the Petroleum Exporting Countries, meeting in Vienna, said it will not adjust its oil output targets, sending prices of crude futures above $82 per barrel on Wednesday, just a day after crude futures fell below $80 per barrel.