OPEC Signals Lower Oil Prices Soon

Worried about the skyrocketing rice of oil? Well relax, says the Organization of Petroleum Exporting Countries, better known as OPEC.

The cartel, made up of the world's principal oil producing nations, has been largely a secondary player in recent years when it comes to oil prices. Instead, futures traders on Wall Street have bid the price up and down, based on expectations of economic growth and currency fluctuations.

But now, OPEC may be reasserting itself when it comes to pricing. At a meeting in Ecuador, Saudi Arabian Oil Minister Ali al-Naimi said the recent surge in prices to $90 a barrel was not representative of a trend, suggesting prices would come back down. He said he would prefer to see prices in the $70 to $80 a barrel range.

His comment suggests that there may be an understanding among the OPEC members of the need to adjust production in the future to promote price stability, though the cartel took no such action at its meeting. Instead, it left production targets intact, with Naimi saying supply and demand appear to be in balance.

So, what sent oil prices surging over the last couple of weeks? According to OPEC, a number of factors combined to push prices higher, none of them really having much to do with the fundamental issue of supply and demand.

Europe was shivering through a cold snap and the dollar lost value after the Federal Reserve announced Quantitative Easing2. But the greenback has since begin to strengthen a bit and eventually, spring will arrive.

As for supply, OPEC has plenty left to give, should it decide to increase production in the future. The member nation's significantly reduced output two years ago at the height of the global recession and has not increased it since.

Naimi says OPEC won't act to increase oil production until worldwide demand picks up, something he says hasn't yet happened.

Motorists, meanwhile, have paid unusually high prices for gasoline during December, mainly because of the escalation in oil prices. But if oil prices begin coming down soon, it could check the rise at the gas pump.