Crude oil rose slightly Thursday at midday, as traders digested the market impact of OPEC's decision in Abu Dhabi to maintain current oil production levels.

Crude oil gained 55 cents to $88.54. Heating oil rose 2 cents to $2.51 and unleaded gasoline rose 3 cents to $2.25.

Despite elevated oil prices, the Organization of Petroleum Exporting Countries Wednesday opted to maintain current production levels, brushing aside calls to pump more crude oil in order to help lower -- what many believe -- oil price that may further slow the U.S. and global economies.

Oil's next move

Traders appeared split on the likely next move for oil prices. Independent Energy Trader Jim Dietz told BloggingStocks Thursday that oil prices could drift toward $80 per barrel in the next few weeks, if the northeast U.S. does not have a sustained cold snap.

"There's some belief building that there is some air [speculative excess not justified by fundamentals] in the oil price now, but that could all change in a hurry if we get a period of really cold weather in the northeastern U.S.," Dietz said. Dietz added he is currently flat, with no day trades or monthly trades with oil.

During periods of sustained price rises for heating oil or gasoline, a 'reverse-causation' takes place in the oil markets, Dietz said. Typically, the price of oil drives the price of heating oil and gasoline. But if heating oil or gasoline rise in price due to demand or a shortage, a reverse-causation occurs and the raw product, crude oil, is driven higher, he added.

Alan Daniak of Anderson & Associates, a consulting firm, takes a more-bearish view of oil, and expects oil to drop below $80 in Q1 2008.

"We think oil has been overvalued for a while, with the declining dollar and investors' long positions adding about $15 dollars to the price of crude," Daniak said. "That excess is now working itself out of the market, which should drive oil toward $80, even below it, to $75 by March 2008."

Investors' influence

Daniak said OPEC has overstated the impact of short-term speculative long positions on the market, "but there has been some upside investor influence." With the above in mind, Daniak said OPEC's decision to maintain production levels "was the correct one given overall demand fundamentals."

"Demand is beginning to show signs of the U.S. economic slowdown, and if that ripples through to the rest of the world, global oil demand increases will begin to the slow. If that occurs, that will increase the gap between global supply and demand, which will further soften oil's price," Daniak said. "A production increase by OPEC would have caused a major drop in oil prices, something that OPEC doesn't want."

OPEC's dilemma

Daniak added that the world is becoming more aware of the dilemma OPEC faces. OPEC does not want a high oil price around $100 per barrel, he said, as it would stifle economic growth and make alternate and renewable energy sources more attractive, "essentially killing the goose that lays the golden egg."

On the other hand, OPEC does not want the oil price to collapse because, obviously, it would substantially reduce the cartel's annual revenue. Daniak said he expects OPEC's revenue to exceed $660 billion in 2007, and reach $690-710 billion in 2008.

"Many cartel nations are in the midst of building their infrastructures and expanding social programs. These build-outs have enormous price tags that have to be funded," Daniak said. "An oil price too high or too low would prevent that, and that's something that OPEC does not want to see happen."