From Bloomberg: OPEC will likely cut oil production at its next meeting in Vienna on November 18th. The oil cartel announced an emergency meeting today after prices for crude oil plunged below $90 a barrel.

OPEC said in a statement today, “The Organization is concerned about the deteriorating economic conditions with contagion risks,” and at the meeting it will “discuss the global financial crisis, the world economic situation and the impacts on the oil market.” Some believe OPEC will cut production by about 500,000 barrels a day.

At 1:13 PM Eastern Time, crude oil for November delivery traded at $86.80 a barrel in New York, down $2.07. Crude prices have fallen 40% from their July record off $147.27 a barrel.

See Professor Lewis’ Minyan Mailbag: The Gold Disconnect for more on the topic.


From the Bull Pen: As Professor Lewis mentioned, the selling in oil and commodities is most likely due to flight from counterparty risk. “If there’s all this demand destruction, then where are the physical inventory builds?” he asks. Bulls attempting the upside can use the oil ETF (USO) with tight stops near the $70 level.

From the Bear Cave: Bears are nervous shorting in this market given the recent massive selloff. So one can stand pat. But if commodities have a sharp rally, expect restaurants and retail to continue to underperform.