Oil rises above $71 on expectations of OPEC cut

NEW YORK -- Oil prices bounced back above $71 a barrel Friday as the Organization of Petroleum Exporting Countries weighed an emergency production cut to stem crude's stunning collapse and U.S. pump prices were poised to fall below $3 a gallon for the first time in eight months.

The downward momentum on oil has grown more feverish in recent days, lopping more than $11 off prices in the previous three trading sessions alone. A barrel of crude hasn't been this cheap in 14 months.

The pullback comes as a widening economic slowdown forces a wholesale contraction in U.S. energy demand: Americans are driving less, airlines are keeping planes on the ground and businesses are winding down operations.

Worried about the financial fallout of the oil price drop in their countries,OPEC, which controls 40% of the world's oil supply, called a special meeting next Friday in Vienna to address the slide. Underscoring the cartel's anxiety, it moved up the meeting by nearly a month.

An Iraqi lawmaker said Friday that the government expects to cut its budget next year by $15 billion because of falling oil prices. Abbas al-Bayati, a senior lawmaker of the United Iraqi Alliance, the largest Shiite bloc in parliament, said the recent plunge would cut into earlier budget estimates, which were made when crude was around $120 a barrel.

Analysts say OPEC could decide to trim output as much as 1 million barrels a day in a bid to halt the slide, in addition to a 500,000 barrel-per-day cut announced last month.

That prospect may have led some traders to bid up oil Friday, though any rally will likely be short-lived given the world's waning appetite for petroleum products, said Addison Armstrong, director of market research at Tradition Energy in Stamford, Conn.

"Demand is really in trouble," Armstrong said. "Every week we get figures showing falling U.S. demand for energy. European demand is just beginning to turn down, and all indications are that China is in for a significant economic downturn."