But this is how crude markets tend to operate. Perceptions control. And this is typical of the crude markets. Swing from one extreme to the other is — swift and brute. Rarely it is a matter of weeks or months for the perceptions to change and settle in. The transition is instant.Markets have witnessed such scenarios in the past too. And this has struck the oil markets once again. It has been a volatile few weeks — in real sense. And many were caught off-guard.Oil prices have lost more than $15 since the beginning of this month alone, and are set to slide still lower, most now feel. Crude fell below $85 a barrel Friday in Asia, as in other places. Benchmark oil for September delivery was down $1.08 to $84.64 a barrel at late afternoon Singapore time in electronic trading on the New York Mercantile Exchange. Crude rose $2.83, or 3.4 percent, to settle at $85.72 on Thursday. In fact this was considerably healthier than the low of $75.71 registered earlier the week. In London, Brent too was down $1.01 to $107.01 per barrel on the ICE Futures exchange.And this has been in making for some time now - for all was indeed not well with the global economy. And this had ramifications - and indeed serious ones - for the energy sector too. For the two are entwined, one can't deny.A combination of high oil prices and slower economic growth has stalled the rise in global oil demand, with zero increase in June, says the International Energy Agency (IEA). Growing concerns over government debts and the likely impact on the global economy are now taking their toll.The IEA global 2011 oil demand has now been trimmed by 100,000 barrels per day to 89.5 million barrels. And in response to the "emerging economic storm clouds," the IEA has also sketched out a scenario of even lower global GDP growth, slashing 2012 oil demand growth too - by more than half. In such a case, the call on OPEC crude would drop below 30 million bpd, the IEA is now saying."Recognizing emerging economic storm clouds, we also run a lower, 3 percent global GDP growth scenario, which more than halves base case 2012 oil demand growth to only 600,000 barrels per day," the agency said in its monthly report.The IEA was the last of the three major global energy agencies to publish its estimates this month. Last Tuesday, OPEC and the US government's energy agency, the Energy Information Administration, too expressed demand doubts — on the back of worsening US and the global economic outlook.In its monthly report OPEC cited "economic worries along with high oil prices" as having affected demand in developed countries, leading to weaker-than-expected consumption during the summer-driving season.OPEC now says the world oil demand is to grow by 1.2 million barrels a day in 2011, 150,000 barrels less than previously projected. The 2012 OPEC forecast of growth in world oil demand stands at 1.3 million barrels a day — slightly lower than the previous projections.On the other hand, the US Energy Department's Energy Information Administration preferred keeping its expectations for global oil demand for 2011 and 2012 intact. In its monthly short-term report, the EIA said world consumption will grow by 1.4 million barrels a day in 2011 and by 1.6 million barrels a day in 2012, despite "continued concerns over the pace of the global economic recovery." And while the global demand was taking a direct hit the Saudi production, registering a 30-year high in July, began impacting the markets too. As per some reports, the Kingdom raised its output by a further 100,000 barrels per day to hit 9.8 million bpd in July. And this also meant that the OPEC has fully compensated for the Libyan outage.And then sustained high crude prices, for a considerable period of time have also helped softening the global demand and consumption, some feel. Total demand for oil products in Asia - the locomotive of the global economic growth in recent years - too has dropped by 500,000 bpd between May and June, dipping from 20.6 million bpd to 20.1 million bpd.The markets have indeed mellowed!But how would the OPEC react to this mellowing? An interesting question indeed - and worth keeping an eye. Murmurs are in the air - OPEC may trim output.OPEC producers prefer oil prices around $100 a barrel and that the group would act to cut production to support prices, they insist. "In the short term, oil will remain weak because of all of this uncertainty of the global economy. But OPEC's stance in the statements made recently clearly indicates they would prefer oil to trade around $100 a barrel. So we think that is the medium-term average price for next couple of years," Angelos Damaskos of Sector Investment Managers Ltd. told Reuters in an interview, indicating the producers would react - sooner rather than later.But is there a real anxiety to be found within OPEC ranks on the count at the moment? The answer seems no.Iran, holder of the OPEC presidency in 2011 and a leading price hawk in the group, said only on Wednesday that OPEC ministers could hold an emergency meeting if members started to feel anxious about falling prices.OPEC has not set a collective price target and Iran's OPEC Gov. Mohammad Ali Khatibi underlined: "OPEC members have not set any price level and they have different opinions, some say $80-90 per barrel is appropriate while others believe higher than $100 is appropriate."And hence at the moment there is no prospect, yet, of any emergency OPEC meeting on the issue before its next scheduled gathering in December, Reuters quoted delegates from two OPEC members as saying. "The situation is very confusing," said a Gulf OPEC delegate. "Demand is weakening and the economy is not encouraging.""But Brent is still more than $100 a barrel. OPEC will wait and see."A delegate from one of OPEC's African members, who opposed the Saudi proposal to boost output in June, also did not expect the group to react to falling prices yet."A price of $90 a barrel will be OK," said the delegate, referring to Brent crude. "If it goes below $90 and stays there, we may need to hold an emergency meeting.And that does not seem on cards - now - one has to be fair.Despite ominous clouds on the horizon, the panic button is still not pressed - within OPEC - one could say with some degree of confidence.
