Oil prices started out last week by falling to $61, the lowest since May 2007. By the end of the week, however, prices recovered due to stronger equity markets, climbing above $70 a barrel on Thursday and closing at $67.81 on Friday. A new report that the US GDP is declining, however, served to hold down price increases

The average price received by OPEC members fell $6.35 last week to $61.53, prompting new talk of a second special OPEC meeting and further production cuts. Venezuelan President Chavez said that after talks in Moscow he was sure that Russia would coordinate production cuts with OPEC. Tehran announced that it already was cutting production by 199,000 b/d and was willing to make further cuts until “stability” returns to the oil market.

There was little news about production fundamentals last week and most price changes continue to come in reaction to financial developments. Several OPEC members have announced that they are starting to reduce production in line with the 1.5 million b/d cuts announced two weeks ago. US Gulf of Mexico oil production is still down by 28 percent due to the September hurricanes.