The price of oil slipped closer to $83 a barrel Wednesday amid speculation OPEC will leave its production quotas unchanged at this week's meeting to avoid hurting an already fragile global economy.
By early afternoon in Europe, benchmark oil for July delivery was down 20 cents to $83.12 per barrel in electronic trading on the New York Mercantile Exchange. The contract rose 62 cents to settle at $83.32 in New York on Tuesday.
In London, Brent crude for July delivery was up 42 cents at $97.56 per barrel on the ICE Futures exchange.
The Organization of Petroleum Exporting Countries is scheduled to hold its quarterly meeting Thursday against a backdrop of a 24 percent crude price decline over the last month or so. Some of the group's 12 members, such as Iran and Venezuela, will likely call on the cartel to cut output in a bid to boost prices.
However, analysts expect most of OPEC, led by Saudi Arabia, will oppose pinching supplies because the global economy is fragile. Lower oil prices should ease fuel costs, eventually freeing up consumer spending in net crude importers such as the U.S., Europe and China.
"OPEC would not want to be seen to kick the global economy when it is down," analysts at Capital Economics wrote in a report.
The International Energy Agency said that while oil supplies had grown slightly in May, to 91.1 million barrels a day, several risks on the horizon, including the effect of sanctions against Iran and the possibility of resurgent growth in China, called for a cautious outlook.
"The market can clearly now be characterized as `better supplied,' but `over-supplied' looks something of a stretch, given the myriad uncertainties that lie ahead for the summer," the Paris-based IEA said in its monthly Oil Market Report released Wednesday.
The IEA also seemed to be calling on OPEC to maintain production levels.
"Some may be tempted to see the market as over-supplied, and there have been calls by a number of producers for `over-production' to be reined-in," the IEA said. "Memories are indeed short: crude prices remain very high in historical terms, and are acting as a drag on household and government budgets in OECD and emerging markets alike. High prices eventually stunt demand growth."
The IEA cut its forecast for oil demand in 2012 to 89.9 million barrels a day from the 90 million barrels a day predicted in its previous report, issued May 11.
The latest U.S. crude supply numbers suggested demand remains weak. The American Petroleum Institute said late Tuesday that crude inventories rose 1.6 million barrels last week while analysts surveyed by Platts, the energy information arm of McGraw-Hill Cos., had predicted a decrease of 2 million barrels.
Inventories of gasoline fell 878,000 barrels last week while distillates added 519,000 barrels, the API said.
The Energy Department's Energy Information Administration reports its weekly supply data _ the market benchmark _ later Wednesday.
In other energy trading, heating oil was up 1.28 cents at $2.6343 per gallon while gasoline futures rose 0.75 cent at $2.6577 per gallon. Natural gas fell 3.5 cents at $2.197 per 1,000 cubic feet.
Alex Kennedy in Singapore contributed to this report.