LONDON, Oct 20: World oil prices slumped on Friday as traders remained unconvinced over news that the Organisation of Petroleum Exporting Countries would cut daily output by 1.2 million barrels.

New York’s main contract, light sweet crude for delivery in November, plunged $1.15 to $57.35 per barrel in pit trading -- very close to its 2006 low. The contract expires at the close.

In London, Brent North Sea crude for December delivery plunged $1.12 to $59.53 per barrel in electronic deals.

Opec oil ministers decided earlier on Friday to slash production by 1.2 million barrels per day (bpd) from November 1 in an attempt to prevent oil prices falling further, and blamed the move on an over-supplied market.

“The market is sceptical about the ability of the cartel to really implement a cut of 1.2 million,” said Investec analyst Bruce Evers.

“It’s going to take six weeks before we really know the amount that has really been taken off the market.”He added: “Whether countries like Indonesia, Libya or Venezuela will actually reduce their production further, remains to be seen.”

A further cut may be required at the 11-nation cartel’s next meeting in the Nigerian capital Abuja on December 14, Evers noted.

Ahead of its extraordinary meeting in Doha, and amid market uncertainty over the exact details of a reduction, Opec had given the impression that the cut would be only one million barrels per day.

The cut will reduce actual production to 26.3 million bpd from 27.5 million bpd currently, which is below Opec's official quota of 28 million bpd, in place since July 2005.

Meanwhile, the head of the International Energy Agency said on Friday that Opec had taken the decision to cut production at the wrong moment as demand could surge in the forthcoming northern hemisphere winter.

The Opec cut “comes truly at a bad moment” because “demand for oil products could be strong if the winter is cold,” IEA executive director Claude Mandil said in a telephone interview.

The announcement was also made “at a time when political risks in certain producers are still significant.”

There had been uncertainty over whether the powerful cartel would reduce output from the quota or current output levels -- which had helped to drive oil prices lower in recent weeks. Organisation of Petroleum Exporting Countries members had last week agreed in principle to a one million bpd cut as oil prices had fallen to below $58 per barrel.

That marked a drop of more than 25 per cent from record highs above $78 struck in July and August, although prices have tripled since 2002.

Opec, in a bid to restore credibility and boost oil prices, has cut its crude output by more than expected, a move cautiously welcomed by analysts and the market on Friday.

Opec, whose 11 members together produce more than one-third of world crude output, said it may carry out a further cut at its scheduled meeting in the Nigerian capital Abuja on December 14.

Michael Davies, an analyst for the Sucden brokerage firm in London, said the cut appears to have sent a clear message to the market that Opec is able to get together and deal with falling prices, restoring much of the organisation's credibility.

With calls for another cut in December to further combat rising stocks, this could be the news the market needed to form a base for the time being.

It has been argued than one of the key factors fuelling the rally (in oil prices earlier this year) has been the disappearance of any Opec spare capacity, analysts at Societe Generale said.

By cutting actual production by more than one million bpd and even more if Opec has to cut another one million bpd in December, its spare capacity would mechanically jump by two million bpd; that is roughly a doubling of its current spare capacity. This might be perceived as a bearish factor for oil prices.

They added: With more than 4.0 million bpd spare capacity, even an oil embargo from Iran could be handled by the other members.Iran, the world's fourth-biggest producer of crude, may face UN sanctions owing to the international crisis surrounding its nuclear programme.

Mohammed Barkindo, Opec's acting secretary general, meanwhile told reporters in Doha late Thursday that the cartel was most concerned about an increase in stocks and a sharp increase by non-OPEC supplies.

He added: It is impossible to rule out the possibility of a second cut in Abuja.On October 16, OPEC downgraded its forecast for world oil demand growth in 2006 by 100,000 barrels per day to average 84.2m bpd over the year.

The International Energy Agency has meanwhile shaved its forecast for growth of global oil demand this year and next.—AFP