LONDON: World oil prices firmed on Tuesday on the eve of a crucial OPEC meeting in Algeria that could see the crude producers' cartel slash output
in a bid to stop the market falling any further, analysts said.
Light sweet crude for delivery in January gained 13 cents to 44.64 dollars a barrel on the New York Mercantile Exchange (NYMEX). On London's InterContinental Exchange (ICE), Brent North Sea crude for January added 16 cents to 44.76 dollars a barrel.
"They're waiting to see what happens," David Johnson, an oil analyst at Macquarie Securities in Hong Kong, said of traders ahead of Wednesday's meeting by the Organisation of the Petroleum Exporting Countries (OPEC) in Oran, Algeria.
Analysts are forecasting a cut of between one million and two million barrels per day from the cartel's official production quota of 27.3 million barrels in an attempt to lift prices weighed down by global recession worries which have damaged demand for oil.
Since July, prices have plunged by about two-thirds in value from record highs above 147 dollars a barrel. Crude futures had briefly bounced above 50 dollars per barrel in New York on Monday for the first time in two weeks, but then retreated as traders pondered a likely OPEC output cut and ongoing economic turmoil.
"Oil fell more then 3.8 percent (on Monday) on concern that a potential OPEC output cut may not overcome falling demand for fuels amid recessions in the United States, Japan and Europe," said BetOnMarkets analyst David Evans.
"OPEC is set to announce its decision on December 17. The price of oil should stick around the 45 dollars per barrel mark until then."
OPEC officials have called on Russia, which does not belong to the cartel, to join in production cuts.
"We hope the non-OPEC countries will help. The market is in a very difficult situation," OPEC Secretary General Abdalla Salem El-Badri told reporters on his arrival in Oran on Monday.
He added he would like to see "a very sizeable cut" in crude oil production. Some analysts have questioned whether OPEC members, who pump about 40 percent of the world's crude, will adhere to output cuts.
"As the market gets all giddy about this proposed cut, today the big question is whether there will be compliance," said Phil Flynn of Alaron Trading Corporation.
But Johnson said the cartel has "done quite well" in meeting its targets for a reduction in output, which is down by almost one million barrels a day since September. If Russia joins the cartel in further cuts, the price could jump back to 65 dollars a barrel, he added.
