OPEC Set to Lower Oil Production in Feb.

Ammuna Lawan Ali, Nigerian Governor for OPEC, arrives at the venue of the OPEC meeting in Abuja, Nigeria, Wednesday, Dec. 13, 2006. OPEC nations weighed a report published Wednesday suggesting no new output cuts were needed to keep oil prices stable. But some members remained unconvinced on the eve of their year-end meeting.(AP Photo/George Osodi) (George Osodi - AP)

ABUJA, Nigeria -- The Organization of Petroleum Exporting Countries said Thursday it will take a half million barrels a day off the market beginning in February, cementing its apparent intention to do or say what it takes to keep oil prices around $60 a barrel.

The cartel, which pumps a third of the world's crude-oil, helped stabilize falling oil prices back in October when it announced a cut of 1.2 million barrels a day. But expectations of slower economic growth and a non-OPEC supply surge in 2007 meant the market was still vulnerable to a price collapse.

To prevent that, OPEC sent a clear signal to the market and energy traders reacted, sending oil prices up by more than $1 a barrel.

Wood Mackenzie oil analyst Ann-Louise Hittle described OPEC's action as "an aggressive approach" intended to put a floor underneath prices.

By delaying the cut until February, however, the cartel left itself a window to change its mind if demand spikes due to a colder-than-expected winter or a stronger economy.

Saudi oil minister Ali Naimi said the price of crude didn't figure in the decision: "What we're working towards is to rebalance the market and this decision does this," he said.

Despite such sentiments _ and although the planned cuts were two months away _ consumers felt the bite immediately.

Unleaded gasoline futures shot up by almost 5 cents and heating oil futures by more than 4 cents, to settle at $1.665 and $1.7765 a gallon respectively, while benchmark crude rose by $1.14 to settle at $62.51 a barrel on the New York Mercantile Exchange.

OPEC's decision reflected fears that the level of oil inventories in the U.S. and other large consuming nations remains too high.

Crude oil inventories in the U.S. and other major consuming nations stand at a 12-year high for this time of year, near 340 million barrels. Forecasts for warm December weather also had depressed prices in recent days. And some oil ministers had come to the meeting at the Nigerian capital worried about the shrinking dollar _ it has lost 10 percent of its value against the euro this year.

Global oil purchases are made in dollars, so as the currency declines so does the global purchasing power of OPEC members.

While addressing that problem, OPEC President Edmund Daukoru told reporters that the organization was "not rushing into other currencies."