Oil prices were relatively unchanged this morning despite OPEC’s announcement yesterday that they were trimming daily production by 500,000 barrels. Just as we had predicted, OPEC’s modest trim had no immediate effect on rising prices. Oil producing countries have fresh memories of what record-setting gas prices did to consumer demand. While it’s highly likely that OPEC will do its best to keep oil prices from reaching July levels, they need to keep oil prices from dipping too much lower in order to maintain profits.

It will be a chess match between consumers and oil-producing countries to keep the price of oil at a level where both consumers will spend and producers can turn a steady profit. Maintaining the US’s dependence on oil will delay the production of alternative fuels and vehicles — good news for OPEC.

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Just prior to the Organization of Petroleum Exporting Countries’ meeting yesterday, oil prices fell to nearly $103 a barrel. OPEC’s decision to reduce production by approximately 500,000 barrels a day is both a response to reduced global consumption as well as an attempt to create a bottom for oil prices, at least for now:

At a news conference after the meeting, (OPEC President Chakib) Khelil said the group was merely responding to oversupply.

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Iran, the Organization of Petroleum Exporting Countries’ (OPEC) second-largest oil producer, may urge the group to limit the amount of crude they export, in order to keep oil prices from falling below $100 a barrel.  OPEC will meet on September 9 to discuss future oil production targets. So far this year, the 13 countries that make up OPEC have maintained an official output limit of 29.67 million barrels per day:

OPEC’s daily shipments of oil will fall 1.5 percent in the four weeks to Sept. 13, according to industry consultant Oil Movements as refiners trim imports while undertaking seasonal maintenance. The 13-member group will load 24.2 million barrels a day in the period, compared with 24.58 million barrels a day shipped in the four weeks ended Aug. 16, the Halifax, England- based consultant said Aug. 28 in a report.

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