No small favors

OPEC's decision, if it holds, will force oil traders to reassess their calculations regarding overall oil market supply and demand, according to Jim Dietz, an independent energy trader.

"Well, as the saying goes, 'So much for small favors.' The oil market needed that supply increase. The market wanted that supply increase. But as of now, it doesn't look like it's in the cards," Dietz told BloggingStocks. "If the no-increase decision holds at the weekend meeting, this puts the oil market back to the old consensus, which is a very small safety cushion between supply and demand."

Dietz said he now expects oil to re-test its 2007 highs, and once again march toward $100 per barrel, and probably beyond.

"Short-term, we'll continue to have some profit-taking, but longer-term, the bias has to be that we're headed higher. There's talk that a slowing global economy will slow oil demand, but I haven't seen that yet," Dietz said. "And the first sign of an extended cold snap or any serious [oil supply] disruption around the world will send this market up several dollars, easily."

Emerging market demand

Many oil industry analysts and traders say an OPEC production increase is needed to counterbalance surging global oil demand, particularly in emerging markets. OPEC accounts for about 40% of the world's oil production.

Dietz was quick to underscore that long-term, global demand will still be the most important factor determining oil's price, but short-term "the market needs a production increase to give traders confidence that supplies will be adequate during the Northern Hemisphere winter," when oil demand increases as homes and offices are heated.

When the Saudi minister Naimi was asked if he was concerned about oil's potential rise to $100 jeopardizing the global economy, Naimi qualified the reporter's question.

"I don't like the word worried; I can be concerned. Everybody is concerned about the world economy," Naimi said in the Financial Times article. "We are interested in making the world economy grow because prosperity ensues from that growth. We have no interest in seeing [it] regress."