Oil prices hovered on the record 100 US dollars a barrel even after Indonesia OPEC (Organization of Petroleum Exporting Countries) governor Maizar Rahman said the cartel has the capability to increase production by 500,000 barrels a day in the coming February meeting. However he warned that oil prices could climb even higher.
"There is a possibility the oil price can head to the 100-110 US dollars level" he said, adding that this would hurt the economic growth of developing countries that do not produce oil and once that happens "the oil price should fall because of the weak purchasing power of developing countries". Lower stockpiles in United States, the weakening dollar and ongoing instability in the Middle East and Nigeria drove oil over 100 US dollars a barrel for the first time ever in New York. However it later emerged that the record was only reached because of a small deal between two New York oil traders. Apparently the two dealers pushed through a small trade in a move that market sources said was simply so they could "tell their grandchildren". Oil has become particularly news-sensitive since the market is at the peak heating oil demand period. From Qatar, oil minister Abdullah Al-Attiyah said that OPEC can do nothing about oil prices that hit a record high of 100 US dollars as "the rise is due to geopolitics and speculation and not supply problems". "I don't think OPEC can do anything" said Al-Attiyah. "If this was related to supply then we could move. But I am confident that it is geopolitics. Speculation has been very strong. It's a game for speculators". Crude at the beginning of 2007 was 50 US dollars a barrel, but even after having reached 100 US dollars a barrel, adjusted for inflation (because of the weakened US dollar) the price is still below the 101.70 US dollars of April 1980, a year after the revolution in Iran, according to Energy International Agency. OPEC ministers have repeatedly argued that in spite of the soar in nominal prices, inflation and the weak US dollar have helped to cushion the impact of higher prices. The argument is to a great extent correct since pension funds, investors and speculators are fleeing from currencies and going into commodities.