Oct. 17 (Bloomberg) -- Crude oil advanced $2 a barrel in New York on signs that OPEC will announce a production cut at a meeting next week.

The Organization of Petroleum Exporting Countries, which supplies more than 40 percent of the world's oil, brought forward to next week a November meeting to discuss output levels. Oil has tumbled more than 50 percent since reaching a record $147.27 in July because the financial crisis threatens to push the world into a recession, curbing fuel demand.

``OPEC is obviously panicking,'' said Peter Beutel, president of energy consultant Cameron Hanover Inc. in New Canaan, Connecticut. ``They are going to do everything and anything to impress the market, even if it means a cut of 2 million barrels.''

Crude oil for November delivery rose $2, or 2.9 percent, to settle at $71.85 a barrel at 2:49 p.m. on the New York Mercantile Exchange. Prices, which dropped 7.5 percent this week, are down 18 percent from a year ago.

``We really overdid it on the down side,'' said Dan Flynn, an energy analyst at Alaron Trading Corp. in Chicago. ``We are also up on concern that OPEC will cut output next week.''

OPEC will likely reduce oil output by 1 million barrels a day at next week's meeting to check the drop in prices, Qatari Oil Minister Abdullah al-Attiyah said.

OPEC oil supplies fell 3.8 percent in September to 31.8 million barrels a day, according to data from Geneva-based consultants PetroLogistics Ltd. The amount declined from 33.05 million barrels in August because of lower sales by Saudi Arabia and Iran, Conrad Gerber, the company founder, said yesterday.

Declining Forecasts

OPEC reduced its forecast for average oil demand next year by 450,000 barrels a day, or 0.5 percent, to 87.21 million barrels a day, in a report Oct. 15. The International Energy Agency and U.S. Energy Department cut their forecasts earlier this month.

``Demand looks bad and until things improve the market is going to be under pressure,'' said Kyle Cooper, an analyst at IAF Advisors in Houston. ``Every rally is a selling opportunity.''

Fuel demand in the U.S., consumer of 24 percent of the world's oil, was at the lowest since July 1999 during the past four weeks, according to a weekly supply report from the Energy Department. Demand averaged about 18.6 million barrels a day, according to yesterday's report.

``This is still a bear market,'' Beutel said. ``There are going to continue to be rallies, which will suddenly have the rug being taken out from under them.''

Brent crude oil for December settlement rose $1.76, or 2.6 percent, to settle at $69.60 a barrel on London's ICE Futures Europe exchange.

To contact the reporter on this story: Mark Shenk in New York at mshenk1@bloomberg.net.

Last Updated: October 17, 2008 15:30 EDT