OIL prices rallied yesterday, ending a long retreat after it seemed

Opec was making progress towards an accord to cut production and mop up

a world glut.

The president of the Organisation of the Petroleum Exporting

Countries, Venezuela's Alirio Parra, said the goal of a Saudi

Arabian-backed plan was to cut 1,500,000 barrels per day from recent

Opec volume of around 25 million bpd.

Sceptical traders doubted if Opec could achieve that much, given a

poor record of quota discipline. But they thought it might remove enough

excess oil to put a floor under prices and perhaps edge them a dollar or

so higher.

''The market is still sceptical about Opec,'' said Geoff Pyne, an

energy economist with UBS Phillips & Drew. ''But I think prices are off

the bottom and we could see some recovery . . .''

London March futures for the benchmark Brent Blend of crude gained

some 60 cents to trade for a while around $17.90 per barrel. New York

light crude futures were soon higher by a similar margin, close to

$19.50. By late afternoon in Europe they had retreated slightly to

around $17.83 and $19.39.

Prices are rallying after a drop of more than 15% since October

because of Opec's failure to curb supply in line with flat demand in an

enfeebled global economy.

Venezuela's Parra is on a tour of key producers to try to broker an

accord to be signed when Opec meets in Vienna on February 13.

In Paris last week he met Saudi minister Hisham Nazer who was later

quoted as saying that Saudi Arabia, the biggest exporter, wanted a cut

in production.

The emerging consensus seems to be to try to cut one million barrels

of daily supply from the present notional Opec ceiling of 24,600,000 --

or 1,500,000 from actual volume now.

But, on the basis of Nazer's quoted remarks, Saudi Arabia still wants

all members to make proportional cuts and would itself only drop to

about eight million from 8,400,000 now.

Crude buyers and analysts said poorer, cash-pinched Third World

sellers like Nigeria might sign such an accord but, on their recent

record, would be unlikely to implement it.

''A credible agreement should at least reflect the reality facing the

smaller producers,'' said Mehdi Varzi, who follows Opec for Kleinwort

Benson Securities in London.

Varzi thought the net effect of the emerging accord would be daily

Opec production around 24 million barrels.

A potential plus for Parra was that Kuwait hinted it might curb output

after earlier wanting to remain excused from Opec rules while it

rebuilds after the 1991 Gulf war.

Reporters asked the Kuwaiti minister, Ali al-Baghli, after he met

Parra whether a Kuwaiti cut had been discussed. He replied: ''Yes,

regrettably, as a possibility . . . this is a bitter medicine . . . but

we cannot break the consensus.''