According to published reports, the OPEC cut, effective Jan. 1, comes on top of previous quota cuts of 2 million barrels per day, for a nearly 5 percent total cut in world oil supplies this year.
Many experts believe that crumbling world oil demand will affect prices more than OPEC's cuts in the short term. Oil traders apparently agreed, as oil prices briefly fell to below $40 a barrel for the first time in four years Wednesday. U.S. crude oil prices settled at $40.06 a barrel.
In addition, the U.S. Energy Information Administration said the nation's crude and refined fuel stockpiles rose last week.
Looking at the long term, the EIA's Annual Energy Outlook 2009, released Wednesday, for the first time in more than 20 years projects virtually no growth in U.S. oil consumption between now and 2030. This reflects the effect of recently enacted CAFE standards, requirements for increased use of renewable fuels, and an assumed rebound in oil prices as the world economy recovers.
The EIA report predicts that in 2007 dollars, the world crude oil price, averaging near $60 in 2009, will rise as the global economy rebounds and global demand once again grows more rapidly than non-OPEC liquids supply. In 2030, the average real price of crude oil is predicted to be $130 per barrel in 2007 dollars ($189 per barrel in nominal dollars).