OPEC oil ministers met Friday to cut output for the second time this year, possibly by more than expected, despite concerns among already anxious industrial countries of economic slowdown.
The oil group's energy chiefs were mostly tightlipped as they headed into an informal meeting to try to hammer out their differences, saying only that they wanted to stabilize markets.
Analysts expect the Organization of Petroleum Exporting Countries (OPEC) is likely to cut output by one million barrels per day (bpd), at the top of the 0.5-1.0 million bpd range forecast earlier this week.
"It is fair to say that the market seems to be focused on this level as the most likely cut," said Lawrence Eagles of the London-based GNI brokerage.
"We suspect that the market will rally sharply after a 1.0 million bpd cut in a positive knee jerk reaction, but those gains will be eroded by the end of the day," he said.
But forecasts of the cut range from 500,000 bpd to 1.5 million.
OPEC, which has seen prices fluctuate wildly over the last two years, from 10 dollars to over 35 dollars last year, is nervous about a new price slump as demand eases going into summer in the northern hemisphere.
The 11-member grouping already cut production by 1.5 million bpd in January to shore up slumping prices, but concerns that prices could weaken yet further have led to calls for another steep cutback.
Saudi Oil Minister Ali al-Nuaimi has refused to show his hand over how big a cut the OPEC's kingpin wants.
He remained tightlipped Friday morning, a few hours before the informal OPEC meeting in a Vienna hotel.
Amid the uncertainty over the OPEC cut, prices slumped to their lowest levels of the year in the last two days, with benchmark Brent crude dipping below 24 dollars a barrel in London.
In London Brent closed at 24.19 Thursday, while Light Sweet Crude closed at 26.55 dollars in New York.
"OPEC faces a dilemma," said Lawrence Eagles,
"The cartel wants to get over the message that it doesn't want to see prices fall too low but, at the same time, it doesn't want to worsen the global economy by a surge in prices," he added.
Saudi Arabia's Al-Nuaimi flatly denied that high oil prices were to blame for a global slowdown. "Absolutely not," he told reporters during his morning jog.
The US slowdown and its impact on other industrial economies are clouding deliberations among the oil ministers.
OPEC Secretary General Ali Rodriguez stressed that OPEC is aware of the impact of its decisions on world economies, as well as on the price of oil.
"There are many factors, like the slowdown in the American economy, in Japan and the impact of the situation in Asia mainly in Korea and Taiwan and other countries," he said.
Friday's formal OPEC meeting is scheduled for late afternoon, after the morning session started slightly late following the last-minute arrival of Indonesia's oil minister.
But at least one minister said the decision could be delayed until Saturday. "Maybe tomorrow, maybe this morning, but maximum tomorrow," Qatari Minister Abdullah Hamad al-Attiyah said.
The OPEC meeting comes after new US Energy Secretary Spencer Abraham said that world oil prices should be determined by market forces rather than supply changes.
Whatever size cut OPEC decides, it is in an "ideal position" to manage the market to its advantage, Roger Diwan of the Washington-based Petroleum Finance Company (PFC) said -- VIENNA (AFP)
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