Prior to the meeting, the US Federal Reserve decided on Tuesday in a surprise move to cut the benchmark interest rate to a range of zero to 0.25 percent, the lowest level ever seen to prevent the country's ailing economy from plunging into deep recession.

The growth rate for the 27 European Union countries in 2008 is estimated to be only 1.4 percent, less than half of that in 2007.

The International Energy Agency (IEA) projected in a report on December 11 that oil demand in 2008 would shrink for the first time since 1983, shedding 200,000 bpd on a year-on-year basis.

The global downturn is now still unfolding itself, chorused by a series of dire demand outlooks that haunt the traders. As a result, the market has turned into a seesaw battle between shrinking supplies and gloomy statistics and projections, at least in the coming few months.

"The demand for OPEC crude is projected to decline sharply in 2009, falling 1.4 million bpd to average 30.2 million bpd," OPEC said in its monthly oil report published on Tuesday, which also put the global total demand at 85.7 million bpd.

The IEA also said in the report that the oil demand in 2009 would rebound to 86.3 million bpd, based on the hypothesis that the world economy will come to life in the second half of the year.

"The impact of the grave global economic downturn had led to a destruction of demand, resulting in unprecedented downward pressure being exerted on price," the cartel said at its meeting in Oran.

Vincent Lauerman, president of Geopolitics Central, a Canada-based energy consultancy, said the recovery might take "several months," recommending a more aggressive cut.

Moreover, non-OPEC producers must be taken into account. "In the United States, the number of operating drilling rigs is dropping and projects to develop the oil sands in Canada have been dropped one after another," said Jakob.

According to OPEC statistics, Canada is now the biggest oil supplier for the United States, whose production could enable traders to catch a glimpse of the new equilibrium.

OPEC's cut was also echoed by Russia, which sent a high-ranking delegation to the meeting and pledged a coordinated policy, but the biggest non-OPEC exporter did not give any tangible words of output cut in Oran on Wednesday.

Khelil told the press conference after the meeting in Oran that OPEC may make further cut in its next ministerial meeting in Marchat the headquarter in Vienna if the 2.2 million cut can not stabilize the market.

Lauerman also hinted the possibility of further cuts if the current one turns out to be a damp squib. "Depending on the length and depth of the global economic slowdown, OPEC may have to cut a whole lot more."

Fair price at hard times

It might be intriguing to define the "fair price" in the unfolding rainy days, since the exploiting costs among the OPEC members are inevitably uneven.

A Morgan Stanley report released in early October revealed that the United Arab Emirates' fiscal accounts would remain balanced even if oil prices were to drop to around US$25 a barrel, and it would remain in surplus even at the current prices.

According to an International Monetary Fund report, Iran, the traditional hawk in OPEC, would suffer from deficit in current account in the near future if the oil is priced below US$75.