OPEC May Not Be Able To Halt Oil's Nosedive

OPEC, the once mighty oil cartel, is looking increasingly impotent. When prices skyrocketed to $150 a barrel, producers claim-ed they didn't have the spare capacity to pump more oil and bring the cost of crude back to earth. They now seem equally incapable of halting a slide. Investors ignored a production cut of 1.5 million barrels in late October, and prices fell by 5 percent the same day. In November, the Saudi oil minister tried to prop up the market by calling for $75-a-barrel oil. The following week, prices hit a four-year low at $41. OPEC will likely announce substantial cuts at its Dec. 17 meeting—but analysts anticipate the move, so lower production is already baked into futures contracts. With world growth braking fast, demand, not supply, has become the real driver of oil prices. Merrill Lynch projects that crude could dip to $25 if the global recession migrates to China. That would mean a winter of discontent for OPEC, and joy for consumers.