Organization of Petroleum Exporting Countries (OPEC)’s record production cuts are draining the glut in world oil markets, leading traders to bet that $50 crude is two months away.

Ever since oil began its 60 per cent plunge from a record $147.27 a barrel in July, traders have been looking for a bottom. Now that the Organisation of Petroleum Exporting Countries reduced supplies 13 per cent since September, inventories are falling 1.4 million barrels a day, according to PVM Oil Associates Ltd, the world’s biggest broker or energy trades between banks.

OPEC will limit exports again when that group meets March 15, according to a survey by Bloomberg News.

OPEC states have more of an incentive than ever to restrict output because the combination of declining prices and the global recession will reduce earnings 59 per cent this year to $402 billion, according to the US Energy Department. Crude demand will drop for a second year, the first back-to-back decline since 1983, the International Energy Agency, said.

OPEC’s cutbacks are "enough to address the surplus," said Harry Tchilinguirian, the senior oil analyst at BNP Paribas SA in London. "If they do more and try to pursue a price target too aggressively, there is a risk of over-tightening the market when the economy is weakening stalling the recovery."

Expectations for a rally gained as oil for April delivery rose for a second day, advancing as much 7.3 per cent to $48.83 a barrel on the New York Mercantile Exchange. The contract, which rose 1.7 per cent last week after jumping 12 per cent the previous week, traded at $47.61.

Futures "will rebound to average $49.56 a barrel in the second quarter, according to the mean of 25 analyst forecasts compiled by Bloomberg since December.

The number of contracts that give traders the option to buy crude at $50 before May 14 more than doubled last week, to 16,952 on the Nymex. The price of the contracts rose 8 percent.

Oil may reach $60 a barrel should OPEC cut production, said Pierre Andurand, chief investment officer at BlueGold Capital Management LLP, the London hedge fund that returned 31 per cent this year. Boone Pickens, the billionaire hedge fund manager, said he expects $75 in 2009, in a CNBC interview penultimate week.

OPEC ministers from Venezuela, Algeria and Qatar said stricter limits may be needed at the March 15 summit in Vienna. While Saudi Arabia, the world's largest exporter has yet to express a view, King Abdullah and Oil Minister Ali al-Naimi said last year that $75 is a fair price for producers and consumers.

"A cut by production countries is more likely, Algerian Oil Minister Chakib Khelil said in a March 2 interview in Madrid. "It’s very much tied to the economic crises, which is much deeper than everybody thought".

Angolan Oil Minister Jose Maria Botelho de Vasconcelos, OPEC’s president, said in an interview with Spiegel Online published last week that the organization will cut if necessary at the March gathering.

In the Bloomberg survey, 31 of 41 analysts said OPEC will limit output for the fourth time next week. Of those, 13 expect a reduction of 500,000 to 1 million barrels a day, 12 say 1 million barrels and two estimated 1.5 million. The rest declined to provide an estimate. Ten of the 41 analysts anticipated on change in the quota. Bloomberg surveyed the analysts March 3 and March 4.