LONDON, Oct 23: Oil prices rebounded on Thursday on the prospect of a cut in output by the Opec cartel, after New York earlier dived to a 16-month low with recession fears stoking concerns for waning demand.

New York’s main contract, light sweet crude for December delivery, was at $69.05 per barrel, up $2.30 from Wednesday, after earlier sinking as low as $65.90 -- a level last seen on June 13, 2007.

Brent North Sea crude for December delivery gained $2.55 to $67.07 per barrel. Brent had Wednesday hit a low of $63.96 that was last witnessed in March 2007.

The market had already fallen heavily on Wednesday on news that demand for crude was flagging in the United States, the world’s biggest energy consumer.

Opec President Chakib Khelil said on Thursday that the oil producers’ cartel would decide to cut production at an emergency meeting due in Vienna on Friday, but would take care not to worsen a global financial crisis.

“We are going to reduce output. By how much? We don’t know.

This is something we are going to decide on Friday,” Khelil, who is also the energy minister of Opec member Algeria, told reporters in Vienna.

Prices have more than halved since striking record high above $147 per barrel in July, as the market has been shaken by slowing global growth and weaker energy demand.

The Organisation of the Petroleum Exporting Countries (Opec) meets in Vienna on Friday with the global financial system facing its worst crisis since the Great Depression.

The US Department of Energy revealed on Wednesday that American crude oil reserves jumped 3.2 million barrels to 311.4 million barrels in the week ending October 17.

That beat market expectations for a smaller increase and highlighted a sharp slowdown in US energy demand.

“The US inventory report showed that the demand for oil is down by almost 10 per cent for the year,” noted BetOnMarkets analyst David Evans.

“Analysts are now estimating that Opec would need to cut its output by more then 1.0 million barrels per day in order to reverse the recent (price) losses.

“We believe that oil might actually touch $60 per barrel before the end of the month.”

Saudi Oil Minister Ali al-Nuaimi refused to be drawn on Thursday on the possibility that Opec will announce a cut to its crude production at an emergency policy meeting due here.

Asked by reporters what Opec would decide at its Vienna meeting, Nuaimi replied: “Who said anything about a cut?”

Opec hardliner Iran stepped up pressure for a controversial cut to crude production with its oil minister Gholam Hossein Nozari calling for output to be slashed by two million barrels per day.

Western leaders oppose such a move, with British Prime Minister Gordon Brown recently saying that any reduction made in a bid to push up oil prices would be “scandalous” at a time when major economies are close to recession.

Opec’s Gulf state members led by Saudi Arabia, the world’s biggest oil exporter, are expected to oppose any major production cuts, analysts said on Thursday.—AFP