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With the recent surge in oil prices, many of you out there may be hoping to see OPEC come in and cool the market with a production increase, but that is far from likely to occur. In fact, OPEC now finds itself in a pretty unusual position (wsj.com subscription required), with the likely outcome being that the group will decide to do nothing at all.

So what exactly is OPEC looking at? The most obvious factor that the group must contend with is all time highs in oil, and a current cost per barrel of $102.50. For so long we kept wondering if / when we would be seeing $100 oil, and that time has come, and now it seems like oil has formed a pretty solid base of support above the psychological $100 barrier. This would typically lead you to believe that OPEC would come in and lift production in order to cool off prices.

But, on the other hand, OPEC also has to contend with a weakening dollar, fears over a possible recession, and rising inventories in America. All three of these, by themselves alone, would be enough to put pressure on OPEC to actually look at tightening its supplies. The group definitely doesn’t want to see a recession spread across America and put a serious crimp in the nation’s appetite for oil.

Continue reading What is OPEC to do?

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This entry was posted on Friday, February 29th, 2008 at 7:11 pm and is filed under Stocks Money News. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.