MARKETS are abuzz. Speculations of all sorts are in air. What will OPEC decide? Will it cut output or not – remains a million dollar question - still to be answered. And then a successor to Secretary-General Abdullah El-Badri, whose second three-year term ends this year, is also to be chosen. This is a contentious issue - with candidates from Saudi Arabia, Iraq and Iran competing for the role. Apparently, the fourth contestant, Ecuadorean Oil Minister Wilson Pastor, has withdrawn from the hot race, media reports. OPEC's 12 members have been pumping an average of 31.6 million barrels a day (bpd) this year, against a ceiling of 30 million bpd. The current average output is most since 2008 on an annual basis. Brent crude has in the meantime, dropped 14 percent from this year's peak on London's ICE Futures Europe exchange. Speculating on OPEC's next move on output quotas could prove to be professionally hazardous. The organization has a history of proving the pundits wrong on the issue. However, the signals so far, have been indicating a rollover of the existing quotas. Global oil supplies are comfortable, Secretary General El-Badri said last week. “The market is comfortable as I see it at this time,” he told Reuters in Doha. Most OPEC ministers and officials too have been underlining, at least publicly, that the oil market is balanced, indicating little desire to alter output targets. “Supply is fine,” Qatari Energy Minister Mohammed Al-Sada underlined a few days back. “Supply is at very comfortable levels and it's reflected by the reserves worldwide,” he added. United Arab Emirates Oil Minister Mohamed Al-Hamli told reporters last month that the world oil market is balanced. And Saudi Minister Ali Al-Naimi has been underlining all along: “I think it's really balanced … the market is in good shape.” However, the OPEC ministerial this Wednesday is to answer some real question. Pundits feel, OPEC needs to act – and act now – by cutting output, so as to put a floor to prices. Stagnant global oil demand, lingering euro zone woes, decelerating GDP in emerging countries and the potential for an already weak US economy to jump off the “fiscal cliff” - all are contributing to total oil consumption staying almost flat over the past two years. Substitution from biofuels and natural gas are also competitive threats hurting oil demand. The energy boom in the US is already contributing to the biggest annual accumulation of inventories since 2008. Oil inventories held by companies in the OECD, increased by 124.8 million barrels, or 4.8 percent, in the nine months through September, IEA said. That's most in percentage terms since 2008, and most since 2001 in terms of volume. The US is producing oil at the fastest rate in almost two decades as new resources in North Dakota, Texas and Oklahoma are being unlocked – courtesy fracking. The nation pumped 6.8 million barrels a day in the week to Nov. 23, the most since February 1994, according to the EIA. The country, which bought 21 percent of OPEC's exports last year, produced more than 83 percent of its own energy in the first eight months of this year, on course to be the highest annual level since 1991. And while dismal conditions in Europe continue to drag the world towards another major recession, the US economy too does not have a clean bill of health, the Chinese dragon may not lead the world out of the coming disaster and in the meantime, Iraq, the second-biggest OPEC member, is embarking on plans to more than double capacity. No wonder, the markets are soft. Many hence feel inaction on part of OPEC could be disastrous. OPEC may need to lower output by 1 million bpd, or 3 percent, in the first half of next year, Societe Generale SA says. Brent crude may drop 20 percent by June if the group doesn't reduce the amount it pumps, the London based Centre for Global Energy Studies said. The benchmark for more than half of the world's crude may sink to $88 a barrel by June if OPEC fails to act, Leo Drollas, CGES chief economist said. “If they don't do anything prices will sag and then fall heavily,” said Drollas, who estimates the group, would need to curb output by 2 million bpd by the middle of next year unless it acts more quickly. “They don't have a great track record of looking ahead. They're nearly always driving by looking in the rear-view mirror. Then the brick wall is suddenly approaching and they slam on the brakes.” “There is a danger if OPEC doesn't do anything that prices may collapse,” said Nordine Ait-Laoussine, who was oil minister for Algeria, in 1991 and 1992 and now runs Nalcosa SA, a Geneva-based consultancy. “The inventory overhang is just untenable. Next year, we have more exports from Iraq, so the overhang may be exacerbated.” “OPEC has some serious cutting to do,” Mike Wittner, head of oil-market research for the Americas at Societe Generale in New York underlined. “This meeting is the calm before the storm,” said Jamie Webster, an analyst at PFC Energy in Singapore. “There's a well-known understanding that at current production levels, unless somebody cuts there will be substantial stockpile builds in the first quarter.” The last time OPEC cut its output target was on Dec. 17, 2008 at a meeting in Oran, Algeria, when it slashed the quota for all members except Iraq by 2.46 million barrels a day to 24.845 million. That ceiling remained until the start of this year, when a new target encompassing all 12 members began. The only silver lining on the horizon, as far as near term oil market prices were concerned, is the geopolitical situation in the oil-producing belt. “Oil demand may still recover, while the concern that political tension in the Middle East and North Africa will worsen, is likely to keep prices at the levels OPEC needs,” believes former OPEC president and the former Algerian oil minister Chakib Khelil, who now runs a Paris-based independent consultancy. If, and this remains a big if, OPEC chooses to change its course on Wednesday, despite the otherwise signals, the justification is very much there. Let's wait and see!