OPEC is watching... closely

"OPEC is watching prices closely. They could cut production if the drop continues and falls below $55 a barrel."

Moncef Kaabi, director of research at Ixis Corporate & Investment Bank in Paris.

An OPEC production cut may push crude prices lower... let´s see how could that happen.

Oil bulls have harped on a lack of spare capacity during the run-up in crude over the last three of four years as being the key driver, if OPEC cuts production, there will be, by definition, more spare capacity.'' In London, Brent crude oil for November settlement rose 29 cents, or 0.5 percent, to $60.70 a barrel on the ICE Futures exchange. Rising winter demand may drive crude oil prices higher in the coming months, said Mike Wittner, global head of energy market research at Calyon London. He expects oil futures to reach $70 a barrel by the end of the year.

Demand will rise

What's going on right now is seasonal, between October and the end of the year, global oil product demand is going to go up. As the wolrd grind our way through the next couple of weeks and stabilize with the help of OPEC, there is upside after that. Gasoline for October delivery rose 2.68 cents, or 1.8 percent, to $1.498 a gallon on the Nymex.

The average price for unleaded gasoline at the pump in the U.S. was $2.384 a gallon, 17 percent lower than a month earlier, according to the American Automobile Association, the U.S. largest car club. Oil fell earlier in the day after BP said it plans to resume output at the eastern side of its Prudhoe Bay oil field later this week.

"There is a lot of crude that was purchased to go to the West Coast to fill in for this shortage in Alaska... that crude is available", said Andy Lipow, president of Lipow Oil Associates LLC, a Houston-based consulting firm.

The eastern part of Prudhoe Bay, the biggest oil field in the U.S., has been offline since early August, when a corroded pipeline leaked oil. BP is producing 250,000 barrels of oil a day from the western side of the field. Most of Prudhoe Bay's crude supplies U.S. West Coast refineries. U.S. Energy Secretary Samuel Bodman said on Aug. 8 that BP may be unable to return Prudhoe Bay to its full output for six months.

Open for Discussions

Iran, OPEC's second-biggest oil producer, is open to discuss "everything" with the U.S. regarding its nuclear program if the U.S. stops threatening sanctions, President Mahmoud Ahmadinejad said in a Washington Post interview published yesterday.

Iran believes that "talks are much better than threats and confrontation," Ahmadinejad, pronounced ah-ma-deen-ah-ZHAD, said in the interview. The Islamic republic, which holds the world's second-largest oil reserves, ignored a United Nations deadline in August to stop uranium enrichment. Traders have expressed concern Iran will cut oil exports if it is punished.