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Monday, October 20, 2008
Oil Up on Potential OPEC Supply Cut; Gas Prices Fall
By Christine Giardina and Adam Samson
FOXBusiness
Oil prices fluctuated Monday morning as traders weighed supply and demand concerns.
Fears that some of the world’s largest economies may slip into recession, potentially reducing oil consumption, have heightened expectations among traders that OPEC will slash production later this week.
“What we have seen over last couple of months is that consumer behavior has changed,” said Ron Planting, American Petroleum Institute. “People have found ways to drive less and have bought more fuel efficient cars. Economic uncertainty has also contributed to lower consumption.”
According to OPEC President Chakib Khelil, there is a “consensus to reduce production.” However, he added that the cartel has not yet agreed on a specific amount to cut.
Jim Ritterbusch, president of Ritterbusch & Associates, said that OPEC “will probably give us a sizable reduction” this week. ”However, it may not be enough to offset the demand deterioration.”
Oil closed Monday $2.14 cents higher at $73.99. Oil now trades at less than half what it did when it hit its record high in July.
Lessening the burden on drivers, the current national average is $2.92 a gallon, according to AAA's Daily Fuel Gauge Report.
In other energy markets, wholesale gas was eight cents higher at $1.74 and heating oil was slightly higher, by 11 cents, at $2.25.
December gold settled $2.30 higher at $790 an ounce after plummeting Friday. December silver rose 36 cents to $9.69 an ounce.
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