OPEC set for major output cut later this week

OPEC oil ministers arriving today amid tight security to this rain-soaked port city raised expectations that the group will slice output significantly when it meets the following day.

The presence of a high-level delegation from nonmember Russia, the world's second-largest oil producer, only added to investors' hopes that coordinated action could stop crude's rapid slide from the record it hit in July above $147 a barrel.

"What is important is that there should be a consensus to cut production. A significant cut," Venezuela's energy minister said after arriving in Algeria's second-largest city.

Rafael Ramirez, whose country ranks among the organisation of Petroleum Exporting Countries' price hawks, added that Venezuela favours a cut of between 1 million to 2 million barrels per day at the meeting.

While the near 70 per cent drop in oil prices from their summer highs is good news for drivers already straining from the financial crisis, members of the 13-nation Organisation of Petroleum Exporting Countries are hurting from levels that are now in some cases below their profit margins.

They and other oil producers also fear a drawn-out lull in prices could hurt investment and lay the groundwork for another sharp price spike down the road.

"There's always been some finger-pointing at OPEC, but now even some (rich consuming nations) are saying maybe prices have gone too far," Olivier Jakob of energy analysis firm Petromatrix in Switzerland said ahead of the meeting.

"In terms of security of supply, you are much worse at $40 a barrel than at $75."