SINGAPORE, December 16 – World oil prices were steady in Asian trade on Tuesday while the market awaited a likely cut in production by the OPEC cartel, dealers said.
In afternoon trade, New York\’s main contract, light sweet crude for January delivery, rose three cents to 44.54 dollars a barrel after dropping 1.77 dollars to 44.51 at the close of floor trading on the New York Mercantile Exchange Monday.
Brent North Sea crude for January fell to 44.54 dollars a barrel, down six cents from 44.60 dollars a barrel after closing down 1.81 dollars on Monday in London.
"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 and two million barrels per day from the cartel\’s official production quota of 27.3 million barrels in a bid to lift prices weighed down by mounting global recession worries which have damaged demand for oil.
Since July, prices have plunged from record highs above 147 dollars a barrel.
"I think the market\’s taking the view that things are bad, and they really want to see some chunky cuts… and they probably want to see Russia coming to the party," Johnson said.
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.
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 the 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 said.
London-based energy consultancy the Centre for Global Energy Studies (CGES) warned on Monday that OPEC could damage global energy demand if it cuts too deeply.
"If OPEC cuts too far it risks undermining demand even further at a time when the global economy needs moderate oil prices," CGES said.