Despite the gloom, though, the IMF still sees the balance between oil suppy and demand as tight and is forecasting that oil prices will remain at $100/barrel or higher through 2012.

The IMF, which uses a simple average of Brent, WTI and Dubai, is projecting an average $103.20 this year and $100/b in 2012, $3.10 and $5.25 below its April forecasts but still well above the 2010 average of $79.03/b.

The IMF and other agencies are concerned that oil supply may be tight. OPEC, on the other hand, is worried that demand may shrink if the world returns to recession.

And it's not just the possibility of a new recessionary phase that must be ringing alarm bells within the oil producer club. OPEC's own house could hardly be described as a haven of calm and cooperation following the acrimony of its last rendezvous on June 8, when the meeting broke up after just a few hours with no agreement. How, therefore, does it expect to address any potential problems that may require it to reduce production?

Libya is unlikely to be producing anything near its pre-revolution volumes of close to 1.6 million b/d when OPEC next meets on December 14 so the need to accommodate Libyan output by assigning new quotas may not turn out to be particularly urgent.

And it may well be that the failure of the June 8 meeting to agree production policy will put member countries on their best behaviour in December.

But a failed meeting -- the first in many years -- hardly creates the kind of confidence ahead of what could be a crucial conference for the cartel. In the three-month runup to the December talks, OPEC needs not only to repair its fractured internal relationships but also to show the outside world that it is doing so.

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