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OPEC moving towards output cut of 700,000-1 million barrels per day

Momentum is building within OPEC for a supply cut of 700,000 to one million barrels per day (bpd) to boost sagging oil prices, but the timing for any reduction has not been decided, a Gulf source said on Tuesday.

"There is a movement (in OPEC) for a cut," the Gulf source told Reuters, adding that oil ministers were in the midst of consultations. "Consensus is starting to build for a reduction of between 700,000 barrels per day (bpd) to one million bpd."

The Organisation of the Petroleum Exporting Countries wants to keep oil around its target price of $25 a barrel for a reference basket of its seven crude oils.

But fears of recession have knocked 25 per cent off oil prices since the September 11 attacks on the United States, pushing OPEC's basket price down to below $20 a barrel.

The Gulf source said the timing of a potential output curb, which would be the cartel's fourth this year, was unclear.

"There are some who want to cut now and others who want to wait until the US retaliation against Afghanistan is over," he said.

The oil cartel chose not to activate its automatic price band mechanism, which stipulates that OPEC cut output if its reference price says below $22 for 10 consecutive trading days -- a point reached on Friday.

The cartel will meet again on November 14 in Vienna.

The Gulf source said agreement had not been reached on whether to involve key Non-OPEC producers in any OPEC output action.

Some members fear losing market share to rival non-OPEC producers whose output, hoisted by two years of lofty prices, has been rising.

But a hastily-arranged meeting between major OPEC and non-OPEC oil producers set for Sunday in Madrid was postponed due to scheduling snags.

OPEC delegates said it was not clear when the meeting -- which was to include Saudi Arabia, Iran, Venezuela, Algeria and non-OPEC's Mexico and Russia -- would be rescheduled.

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