CGES said in its Monthly Oil Report, "OPEC is once again denying that rising prices reflect market fundamentals, as it did in early 2008, setting the scene for higher prices if it does not act."

Energy analysts say increased production by the producer group can still help moderate oil prices, which are set to rise higher amid market and political uncertainties and traders' perception that supplies aren't enough to meet present and future demand.

CGES said that with benchmark oil prices pushing against the "psychological barrier" of $100 per barrel, OPEC needs to increase supplies to balance the market. Until recently OPEC ministers were saying that prices less than $100 a barrel would be fair but in later statements several ministers came out in support of prices of more than $100 a barrel.

Market uncertainty figured in the oil trade Monday, as the hint of a possible increase in OPEC output pushed the prices down to $88 a barrel. Analysts said the price drop was unlikely to sustain.

The think tank's report said pressure on global supplies resulted from the unexpectedly strong oil demand in the second half of 2010, which saw year-on-year growth of 3 million barrels a day. The increase in demand caused global stocks to be depleted in the absence of higher OPEC supplies. Nearly four days worth of forward demand was affected by the draw on global stocks, CGES said.

"The world now needs more oil from OPEC to balance the market and bring oil prices back into the range that the organization has, until recently, asserted is a 'fair' level for oil prices for all," CGES said.

Several OPEC ministers seem once again to be raising their assessment of a "fair" price for oil in line with increases in actual prices, said the report.

When oil prices loomed more than $80 a barrel last April, OPEC ministers claimed the organization would take action only if the prices reached $100 a barrel.

"Now that they have all but reached that level, several OPEC ministers are suggesting that $100 a barrel is now a fair price for oil" -- in other words, it can stay at that level and not lower, the report said.

"OPEC ministers are again seeking to put the blame for rising prices on anything but the underlying market fundamentals and their own failure to respond to the market's need for more of their oil, just as they did in early 2008," CGES said, citing previous periods of dramatic price spikes.

The think tank urged OPEC to do more to use its spare capacity to calm the oil markets.

"Each time oil prices have approached a level that might have been expected to trigger a response from OPEC, the organization has found a reason to do nothing, preferring instead to let oil prices rise, regardless of the consequences this may have regarding the future demand for its own oil," CGES said, echoing analysts' concern that expensive oil wouldn't only hurt global economic recovery but also force consumers to cut back on crude oil use, thus causing OPEC to lose markets.

Citing the contrast between market policies of Saudi Arabia and other member countries, the center said while "the largest member in terms of oil production (Saudi Arabia) has traditionally had an interest in the long-term health of oil demand, most member-countries now seem to have only a short-term view of their own interests."

Saudi Arabia's Oil Minister Ali al-Naimi said OPEC will meet growing demand for crude but gave no details if the comment meant the producer group would meet to raise quotas. The comment led to the lowest settlement prices for this year.

On the New York Mercantile Exchange, the price of light, sweet crude oil for March delivery shed $1.32 to $87.79 per barrel. Home heating oil prices lost 0.14 cents to $2.653 per gallon. Reformulated blendstock gasoline prices lost 1.06 cents to $2.4679 per gallon. Natural gas prices lost 1.2 cents to $4.724 per million British thermal units.

At the pump, the national U.S. domestic price of unleaded gasoline was $3.112 per gallon Monday, slightly lower than Sunday's $3.113, AAA said.

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