The oil market's conflicting signals complicate OPEC's output choices

OPEC is facing a bit of a dilemma as it prepares for a production meeting later this month: Does it evaluate the oil market based on supply and demand fundamentals -- or on the current price? Oil traded late Wednesday afternoon down sharply, to around $70.75 per barrel, after falling on Tuesday. However, it's still up about 100% since this time last year.

The consensus is that OPEC nations, which produce about 40% of the world's oil, won't cut production during a meeting in Luanda, Angola, later this month where the cartel will discuss production policy and output quotas. Saudi Arabian Oil Minister Ali al-Naimi signaled as much when he told Bloomberg News oil prices are in "the right range" and there is no need to reduce production.