By Mark Shenk Oct. 23 (Bloomberg) -- Crude oil rose from a 16-month low after Iran said OPEC should cut production by 2 million barrels a day to stem the slump in prices. Iranian Oil Minister Gholamhossein Nozari said OPEC must ``balance'' the market, after prices tumbled 54 percent from a record in July. Analysts in a Bloomberg News survey expect OPEC to reduce output by at least 1 million barrels a day when the group meets in Vienna tomorrow. ``If OPEC makes a cut of 1 to 2 million barrels tomorrow, prices should firm up and move higher in the short term,'' said Gene McGillian, an analyst at Tradition Energy in Stamford, Connecticut. ``Unless there is something huge announced, the market will eventually start moving lower again because of the weak economy.'' Crude oil for December delivery rose $1.53, or 2.3 percent, to $68.28 a barrel at 1:13 p.m. on the New York Mercantile Exchange. Futures touched $65.90, the lowest since June 13, 2007. Prices are down 21 percent from a year ago. ``Prices have fallen a great deal, so a gain should be expected,'' said Peter Beutel, president of energy consultant Cameron Hanover Inc. in New Canaan, Connecticut. ``I think we are in a bear market where every rally will be followed by a move to a new low.'' Saudi Arabia Oil prices dipped to the low today after Saudi Arabian Oil Minister Ali al-Naimi declined to express his support for a possible cut, on his arrival in Vienna. Saudi Arabia and Iran are the group's biggest producers. ``Who said anything about a cut?'' al-Naimi said when asked whether he supports the possibility of the group agreeing to reduce output when it meets tomorrow. ``Prices will be determined by the market.'' OPEC needs to lower production to restore equilibrium after the exit of speculators from the market hastened oil's drop from July's record, the group's president, Chakib Khelil, said. OPEC, whose members supply more than 40 percent of the world's oil, has asked Russia and other non-OPEC suppliers to trim output, he said. He wasn't confident Russia would respond, he added. ``If the Saudis don't play ball, it doesn't matter what OPEC decides,'' said Christopher Edmonds, the managing principal of FIG Partners Energy Research & Capital Group in Atlanta. ``Without Saudi support and compliance with a production cut, the cartel doesn't even need to meet. It will have an immaterial impact on production and price.'' Inventory Buildup The group needs to avoid a buildup in crude inventories that could cause a collapse in oil prices next year, Edmonds said. OPEC should evaluate whether a further cut is needed when it meets in Algeria in December, Venezuelan Oil Minister Rafael Ramirez said today. ``We are going to parse the statement they make tomorrow,'' said Kyle Cooper, an analyst at IAF Advisors in Houston. ``The tone of the statement may be more important than the amount they actually cut.'' The last time OPEC lowered quotas was at a December 2006 meeting in Abuja, Nigeria. The 500,000 barrel-a-day cut took effect in February 2007, expanding an earlier reduction agreed to in October. The cuts were reversed later in 2007 as prices rose. Brent crude oil for December settlement rose $2.12, or 3.3 percent, to $66.64 a barrel on London's ICE Futures Europe exchange. To contact the reporter on this story: Mark Shenk in New York at mshenk1@bloomberg.net.

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