OPEC ministers decided to hike output by 500,000 BPD slightly less then expected but here are seven reasons why that hike in output won't have much of an effect on rising oil prices or gasoline prices:

1. Most likely OPEC already produced more then their official output quota and the hike in the official production quota last week was more of a move to get the quota closer to or at current production levels which actually means that OPEC will supply the market with as much oil as it did before the hike.

2. Experts believe that all OPEC members currently produce at full capacity with the exception of Saudi Arabia which may have an additional supply of 1.5M-2.0M BPD. The problem with Saudi Arabia is that their reserves consist of Heavy Sour Crude and not Light Sweet Crude which is needed by refineries in the U.S.

3. The main problem for high gasoline prices is not that there is not enough supply of crude oil but rather a lack of refineries which process crude oil into gasoline.

4. OPEC has lost control over the price of oil and non-OPEC members contribute more to the global crude supplies and continue to increase their share of total global crude output.

5. Crude oil is priced in U.S. dollars and the drop in the currency will, at least temporarily, continue to push the price of oil higher.

6. Geopolitical tensions seem to increase in activity and traders keep a close eye on the developments and therefore add some risk-premium into the price of oil.

7. Fundamentals support the most recent rally. Demand is elevated and emerging economies continue to increase their demand while supply currently remains stable and the result is the continued upward pressure on oil prices.

Short-Term Prediction over the next six weeks:

Oil prices are likely to move higher and reach a level between $85 and $90 per barrel before a pull-back to the $79-$80 per barrel level. Should oil prices fail to close below $80 per barrel for three consecutive trading days another upward move is to be expected which will push the price of oil into new record territory.

Even when prices began to drop below $70 last year I predicted they'd be back soon enough. I've seen suggestions that it could even go towards $100 over the next 6 months.

Either way, I think the arguments are sound - funny how Nigeria and Iran especially have refining problems.

So the general movement is going to have to be up.

Oh, to be a Sheik with an oil field at present...