After getting off to a strong start earlier in the session, oil prices have traded lower in mid-day action on a growing assumption that OPEC will elect to raise its output quota during next week's meeting. It should come as no surprise really that we are starting to hear some OPEC rumors considering that oil prices have ballooned by over 40% since August and have been testing even inflation-adjusted all time highs in its pursuit of the $100 mark.

As fellow BloggingStocks writer Joseph Lazzaro pointed out earlier this morning, prices had risen as high as $99.11 this morning in reaction to lower temperatures, but that has all changed as traders have instead focused on news from over the weekend indicating that the thirteen nation oil cartel OPEC may be considering production increases next week.

The main cause for the rising belief in OPEC adjustments comes from a statement this weekend by Iranian Oil Minister Iranian Gholam Hossein Nozari, who stated that his country would be willing to consider lifting its quota. According to Nozari, "if statistics and data indicate there is a need to produce more oil, we have the capacity to increase the output and supply more oil for the market." However, he made it clear that he did not believe that the world was currently facing a shortage of the precious crude.

Oil prices have retreated a bit today as last week's concerns over a tropical storm in the Gulf of Mexico turned out to be unwarranted. Now that the latest supply disruption scare has passed, most analysts are expecting to see prices continue to fall after oil's strong gains earlier this month.

I would caution against assuming too quickly that prices are going to head too much further south. There are still several factors that could easily keep prices at least where they are now, if not higher. The main issue this time of year is always going to be possible hurricane disruptions.

While this past weekend's scare fizzled out before causing any damage, the next possible major storm could form at any time, which would resonate panic in the markets and edge prices higher.

ExxonMobil (NYSE: XOM) implied volatility near average as oil trades above $82.

XOM closed at $91.76. Crude oil futures were up 0.79% to $82.15 according to Bloomberg. XOM overall option implied volatility of 26 is near its 26-week average of 24 according to Track Data, suggesting non-directional price fluctuations.

Chevron (NYSE: CVX) implied volatility near average as oil trades above $82.

CVX is an integrated energy company with a market cap of $198 billion and quarterly June 2007 revenue of $56 billion. CVX closed at $93.34. Crude oil futures are up 0.79% to $82.15 according to Bloomberg. CVX overall option implied volatility of 25 is near its 26-week average according to Track Data, suggesting non-directional risks.

Daily options Update is provided by Stock Specialist Paul Foster of theflyonthewall.com.