Depending on who you happen to be listening to, the price for a barrel of crude in 2008 will range from below $40 to over $120. As if you weren't worried enough when oil prices rose to just under $104 a barrel yesterday morning, the European Union's energy commissioner tossed out another benchmark: $200 a barrel within three years.

Believe me, dear reader, even hinting at $200 a barrel would get me laughed out of the room.

But then again, it would be from the same people that laughed when I reported crude oil would break $100 a barrel. So I'll take their jokes with a grain of salt and see what they say in a year.

When OPEC meets this week in Vienna, one question will be on their minds...

"To cut or not to cut," OPEC asks.

"Does it even matter?" I quickly reply.

For the last few weeks, practically everyone has speculated about whether the almighty oil cartel (which controls roughly 40% of the world's oil production) will change its output levels. After all, Bush has been practically begging OPEC for another production increase to ease oil prices. Unfortunately, his pleas have fallen on deaf ears. I don't expect production levels to change at the Vienna meeting.

The reason?

Well, there's several reasons, actually.

Since OPEC looks committed to defending oil prices over $90 a barrel, there's no reason to cut production with oil over $103 a barrel. Not surprisingly, Iran, Venezuela and Algeria have been scoffing at the idea of a production increase, insisting that demand for their oil will fall by a million and a half barrels per day in the second quarter of 2008. Furthermore, oil inventories have been rising lately. U.S. crude inventories, for example, have risen for six straight weeks.

But here's the thing...

It doesn't matter what they decide.

You see, even if OPEC decides not to touch their production levels, an unofficial cut can be made at a later date. If oil prices fall back down around $90 a barrel during the second quarter, I would expect a few OPEC members to cut their daily production.

Revising Oil Price Reports... Again

One scene that has been replaying over and over so far in 2008 is revising oil forecasts. If you ask me why analysts are constantly raising their forecasts for oil prices in 2008, I'd say right away, "Well, at least they're trying to get it right."

The latest word from Goldman Sachs is that their analysts are about to raise their 5-year oil price forecast of $85 a barrel due to increased exploration and production costs. Better late than never, I guess.

According to the Energy Information Administration's (EIA) Short Term Energy Outlook, we can expect the first half of 2008 to "remain relatively tight" before getting relief later on down the road. In the latter half of 2008, they report that surplus production capacity will move oil prices lower.

Don't worry, there's still time for the EIA to make any changes.

Here we are, caught in the middle. On the one hand we have OPEC saying that second quarter demand is going to fall. That means a production increase is out of the question. Over on the other hand, the EIA is telling us the opposite-oil markets are getting tighter in the short term. Unfortunately, the EIA isn't controlling OPEC output levels.

So are you supposed to just sit around until everyone makes up their mind?

I hope not.

Investing in Oil Stocks

For investors, there are several areas I would concentrate on. Last year, the International Energy Agency (IEA) reported that more than twenty trillion dollars of investment in the supply infrastructure is needed to meet its energy demand.

I've told my readers before that once we hit the 2008 summer driving season, oil prices could top as much as $120 a barrel, possibly even more. Investors looking to establish a strong position in the oil markets before prices reach that level are running out of time.

Personally, I see several areas that will be doing very well over the next few years. On Thursday, I'm going to show you five sectors that oil investors absolutely need to play over the next three months. I understand if you're a bit impatient. After all, we only have a few more months until the summer driving season. So if you're interested in checking out some of these profiting oil stocks now, feel free to find out more at the $20 Trillion Report.

Until next time,

Keith Kohl

www.energyandcapital.com

"Energy stocks... The only way a human is going to make any money."

-- Matt Simmons, Peak Oil's first and most vocal proponent,
and founder of the country's last pure play energy investment banking firm.

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The truth about the oil markets is that we are at peak production. Natural Decline will force OPEC to reduce production, OPEC won't reduce production