UPDATE 6-Oil dips on economic woes, OPEC set to slash output

                                
 * Economic troubles dim demand outlook
                                
 * OPEC seen cutting up to 2 million barrels a day
                                
 * U.S. Fed seen cutting interest rates to near zero
                                
(Recasts, updates prices, market activity)
                                
 By David Sheppard
                                
 LONDON, Dec 16 (Reuters) - Oil prices slipped on Tuesday as
lingering worries about shrinking global energy demand
countered expectations OPEC producers will agree to deepen
their supply cuts.
                                
 Oil ministers from the Organization of the Petroleum
Exporting Countries will meet in Algeria on Wednesday, with
many members calling for output cuts of up to 2 million barrels
per day (bpd).
                                
 "The market may be calling OPEC's bluff," said Stephen
Schork, editor at the Schork Report in Philadelphia.
                                
  U.S. light crude for January delivery <CLc1> eased 18
cents to $44.33 a barrel at 1600 GMT. London Brent crude
<LCOc1> was up 55 cents to $45.15.
                                
 Oil prices are drifting just above a four-year trough of
$40.50  a barrel hit on Dec. 5 and remain down more than $100
the July record above $147 a barrel as a financial crisis hits
fuel consumption.
                                
 The market slump has raised alarm bells for OPEC nations
and other big producer countries that depend on revenues from
energy exports.
                                
 "OPEC won't face a bigger decision than this for some time
to come," Bank of Ireland analyst Paul Harris said.
                                
 "If they don't put a floor under prices with a cut of some
significance then it could have huge ramifications for the
future of the oil market."
                                
 The producer group expects global demand for its crude oil
to fall by an average of 1.4 million bpd next year due to the
downturn in the world economy. The drop in demand will be even
more dramatic in the first quarter.
                                
 "In the first quater of 2009, the demand for OPEC crude is
expected to see a sharp drop of 2.3 million bpd from the same
quarter in the previous year," it said in its latest monthly
report on the oil market. [nLG450480]
                                
 OPEC already has agreed to cut output by 2 million barrels
a day at two previous meetings. But demand has fallen faster
and as a result, stocks of oil are building up.
                                
 OPEC said 45 million barrels of crude oil are currently
being stored at sea on oil tankers.
                                
 Crude oil stocks in top energy consumer the United States
are running near the top of the five-year range and forecasters
expect data to show they rose by another 300,000 barrels last
week, according to a Reuters' poll ahead of the U.S. fuel
inventory report due on Wednesday. [EIA/S]
                                
 Global financial markets are watching the U.S. Federal
Reserve, which is expected to cut interest rates close to zero
on Tuesday to fight the slowdown in the world's largest
economy. The announcement is expected around 1915 GMT.
[ID:nN15504845].
 (Additional reporting by Richard Valdmanis in New York, Ikuko
Kao and Jane Merriman in London and Annika Breidthardt in
Singapore; Editing by David Gregorio)