As OPEC talks currency, traders focus on supply

Still, most analysts viewed any attempt by OPEC members to reduce dollar holdings as largely self-defeating: selling dollars will only drive the dollar lower still, further reducing each member's oil-based purchasing power. The dollar fell to 1.4666 against the euro and 110.28 against the yen in mid-day Monday trading on the OPEC news, before recovering slightly.

Meanwhile, many traders looked past OPEC's currency reserve discussion to the all-important issue for the oil markets: production. At the meeting, OPEC turned aside suggestions to raise production quotas. As a result, some oil analysts say heating oil inventories could be pressured if the Northern Hemisphere experiences a cold start to its winter season. Heating oil gained 1.5 cents to $2.60 per gallon in Monday morning trading.

Oil Analysis: While OPEC's weekend discussion did cause the dollar to fall slightly Monday, most oil traders focused on OPEC's key variable in the oil price equation: production. Many traders still see the need for OPEC to increase production this winter to maintain an adequate safety cushion between global supply and demand. With OPEC having merely maintained current production quotas at the Riyadh summit, traders sense a tightening market for crude supplies in the winter months ahead, particularly if the heating oil-based northeast U.S. experiences a protracted cold snap at the season's start.