Venezuela, which earlier this month at a summit of oil producing nations suggested that producers add political objectives to their agenda, Tuesday called for oil to be priced in a basket of currencies, and not the U.S. dollar, Reuters reported.

Venezuela's Energy Minister Rafael Ramirez blamed the United States for high oil prices, which he attributed to both political pressure on oil producing nations by the U.S. and the weak U.S. dollar.

Oil drops

Ramirez's comments had little upward impact on the oil markets Tuesday at mid-day: oil fell more than $2.50 to $95.17 on word that OPEC will be able to fulfill its stated goal to increase oil production by 500,000 barrels per day, Bloomberg News reported. Equally important, the markets are now more-confident that Saudi Arabia, which has the most spare capacity in OPEC, is increasing its production. Saudi Oil Minister Ali al-Naimi said Saudi Arabia is now pumping 9 million barrels per day, according to Bloomberg News.

In addition, unleaded gasoline dropped about 5 cents to $2.39, while heating oil declined 3 cents to $2.67.

Jim Dietz, independent energy trader, told Bloggingstocks that the Saudi announcement eases concerns about oil supplies, but a further confirmation is needed in the heating oil market.

"If we see heating oil prices continue to drop over a period of a week or so, despite cooler temperatures, that would be an indication that the market is now convinced that overall oil supplies with be sufficient for the U.S. winter," Dietz told Bloggingstocks. "It that occurs, it means we have a decent safety margin -- not a large margin -- but it's better than where we were."

Dollar firms

The U.S. dollar has fallen for more than two years versus the euro and British pound, among other currencies, due to the nation's trade deficit, federal budget deficit, low savings rate, low GDP growth rate, and relatively low interest rates.

However, the dollar was slightly higher across-the-board on Tuesday at mid-day. The dollar improved to 1.4825 versus the euro, to $2.0646 against the pound, and to 108.55 yen versus Japan's yen.

At the oil producers conference in Riyadh, Venezuelan President Hugo Chavez raised the issue of shifting OPEC's pricing mechanism, which currently is the U.S. dollar, to other currencies. Saudi Arabia, arguably the cartel's most powerful member, opposed the change, and the measure died. OPEC meets again on December 5.

Oil Analysis: If there's further confirmation of Saudi Arabia's nine million barrel per day oil production, the oil market will have registered its first good news data point in at least three months. In trading terms, the additional Saudi oil represents an "objective event" that could change the market's complexion. The safety cushion between supply and demand remains small, but fears about supply shortages during the Northern Hemisphere winter should subside, which should be enough to drive prices toward $90 per barrel.