Mumbai: Crude oil prices rebounded above $100 a barrel after a compromise decision by the Organisation of Petroleum Exporting Countries (OPEC) to cut production by around 530,000 barrels a day.

Light sweet crude for October delivery, New York's main contract, was up $1.41 to $104.67 a barrel while Brent North Sea crude rose $1.06 to $101.40 in Asian trade.

Announcing an output cut by 530,000 barrels per day to 28.8 million barrels per day, OPEC president and Algerian energy minister Chakib Khelil said the output cut would start immediately.

The decision comes after oil prices slid below $100 a barrel for the first time since April.

The compromise decision, after OPEC kingpin Saudi Arabia last month announced a unilateral hike in production, was backed by Russia, which was represented by deputy prime minister and chairman of state oil giant Rosneft, Igor Sechin.

While it may not be easy for Russia to act closely with OPEC, considering the fact that the Saudis and most Gulf Arab states are close allies of the US and harbour strong suspicions about Russian motives.

Russia, however, has its own allies and Russian participation might be welcomed by countries like Iran, Algeria, Venezuela and Libya, who may want to balance Saudi Arabia's oil clout.

The announcement, coming after the October Brent crude fell by $4.14 to $99.3 a barrel on London's ICE commodities exchange, slipping below $100 for the first time since the beginning of April, helped avert a turmoil in oil markets, by preventing prices from falling too far.

Oil prices have fallen nearly 30 per cent from the $147 high seen in July as projections of slower global economic growth have dampened demand.

''The market is fairly well balanced. I think things are in balance, in a healthy position,'' said Saudi oil minister Ali Naimi.

''We believe the market is oversupplied,'' added Iran's oil minister Gholam Hossein Nozari.

It was, however, a climbdown for Saudi, which has been holding to the stance that it was happy with the current scenario.

OPEC in theory binds 12 of its members to a production quota of 29.67 million barrels per day (bpd), but the group is unofficially producing about a million bpd more than this.

Saudi Arabia accounts for most of this "overproduction" after it unilaterally hiked its production in June and May and several members called for a return to quota levels as OPEC's meeting began. Saudi Arabia also accounts for around a third of Opec's output.

"Countries should stick to quotas at all times, so we saying no cut (to the official production target) but they should stick to quotas," said Kuwaiti oil minister Mohammad Al-Olaim, normally a key ally of Saudi Arabia.

Iran, Iraq and Venezuela have identified $100 as their minimum level for oil, while analysts see Saudi Arabia as being comfortable with a figure around $80 or $90.

OPEC president and Algerian energy minister Chakib Khelil told a press briefing in Vienna yesterday that over the long term, he expected oil prices in the range of $70 to $110 a barrel.

Oil prices are falling partly because of the strength of the US dollar, but the fundamental reason is the slowdown in the global economy and fears of recession in America and Europe. Economic growth in China, India and other emerging markets is also stalling, which has depressed demand for oil and other raw materials.