The oil ministers of the 13-member oil cartel will gather tomorrow in the northwestern Algerian city of Oran, where an aggressive overall output cut is widely expected to be made to weather the ailing oil market.

OUTPUT CUT WIDELY EXPECTED

The possibility of a mega slash is mounting before the meeting as the heavyweights of the organization have suggested the cut in public.

Chakib Khelil, OPEC current rotating president, who is also the Algerian Minister of Energy and Mines, said on Dec. 6 that OPEC, which pumps nearly 40 percent of world's oil, is to cut its oil output in a "significant magnitude", in order to stem the tumbling oil prices.

He reiterated on December 11 that the reduction in Oran would be "severe."

Moreover, OPEC Secretary General Abdalla Salem el-Badri also hinted a further oil output cut in early December.

He told Iran's Energy and Oil Information Network (SHANA) on the sidelines of the 13th International Oil and Gas Conference of the Institute for International Energy Studies that the OPEC "is ready to cut production by another million barrel, which is a good amount," adding that "we are all geared towards it."

Iran's Oil Minister Gholam Hossein Nozari reckoned on Nov. 30 that the global oil market is oversupplied by 2 million barrels per day (bpd), revealing the traditional oil hawk's appetite for a deep reduction.

But all of them refused to unveil the exact number, while analysts predict a cut of as much as 1.5 million bpd to 2 million bpd is feasible.

Conley Turner, Wall Street Strategies' senior research analyst, told Xinhua that "production cuts by OPEC will amount to slightly over 2 million barrels."

"There is a huge incentive for the cartel to follow through with this as the prolonged price decline is bound to have an adverse impact on the respective economies of its members," said Turner.

Olivier Jakob, managing director of Petromatrix, a Swiss-based independent research group specialized in the oil markets, told Xinhua that a supplementary cut of 1.5 million bpd should be enough to prevent an acceleration of stock build and create a favorable support to target US$70 a barrel.

Iran's IRNA news agency reported on Dec. 14 that Tehran calls for an OPEC output cut of 1.5 million to 2 million bpd in the cartel's coming Oran meeting.

"Our position in the upcoming OPEC meeting in Algeria is a cut of 1.5 million to two million barrels per day in OPEC's quota output," Iranian Oil Minister Gholam Hossein Nozari said.

The biggest non-OPEC exporter Russia, which was said to send a delegation headed by Vice Prime Minister Igor Sechin to the Oran meeting, said it is ready to coordinate OPEC's oil output cut to cope with the plunge in crude prices.

Russian President Dmitry Medvedev even said on December 11 that the country is considering a membership of the cartel if it is in Moscow's national interests.

"In fact, even Russia has stated interest in cutting back on its production as it has vested interest in seeing oil prices stabilize," Turner said, adding that "in that case, the total cut in production including Russia will be closer to 3 million barrels a day."

FALTERING OIL PRICES IN GLOBAL DOWNTURN

During the past four months, the OPEC had made two coordinated cuts to shore up the plunging prices. A modest cut of 520,000 bpd was made on September 10 and then a 1.5-million one was announced on October 24 in its Vienna meeting. But the two decisions both failed to revive the falling prices.

Later at its consultative meeting in Cairo on November 29, the cartel decided to maintain crude oil output until its meeting in Algeria's Oran.

Defying the organization's supply maneuver, oil prices have plummeted from its zenith of some US$147 per barrel on July 11 to some US$40 a barrel, shedding about 70 percent over the past five months.

Yesterday, Brent North Sea crude for delivery in January hit US$45.81 in London's Inter Continental Exchange, while light, sweet crude for January delivery was once traded briefly above US$50 a barrel in the New York Mercantile Exchange, indicating a market digestion of the cut expectations.

As the global economic downturn is rippling through every corner of the world, stagnation and the ensuing shrink of demand, oil in particular, prevails among the major crude consumers, including the United States, Europe and Japan.

According to OPEC's forecasts on November 29, oil demand will not revive significantly until the first half of next year, given the concerns of a worldwide recession.

The Organization for Economic Cooperation and Development (OECD)forecast last month that the economy of the United States, the biggest oil consumer, will shrink by 0.9 percent next year with contraction in the first half of the year, giving way to a "languid" recovery.

The Paris-based intergovernmental think tank, whose member countries account for 60 percent of world economy, also warned that the downturn was still far from its nadir at the end of this year, adding the growth rate for the 27-member European Union in 2008 is projected to be only 1.4 percent, less than half of that in 2007.

The oil cartel realized that "in the first quarter of next year we are probably going to have a decline in demand," according to Khelil on the sidelines of a OPEC ministerial conference in Cairo on November 29, which paved the way for the Oran meeting.

Taking all the clues into account, the chance of a decisive cut by the OPEC in the upcoming meeting is beyond even, though the outcome is still unpredictable and the short-term momentum of the reduction remains volatile.