Any agreement by the

Organization of Petroleum Exporting Countries

to rein in the oversupplied crude oil market will have to exceed expectations to keep oil prices strong, analysts say. And expectations are high indeed.

Already, investors are showing some signs of worry about whether OPEC will come through. Thursday the April crude contract was trading at $14.33, down 36 cents. And some oil-service stocks retreated Thursday after several positive sessions.

But these past few days have seen actual enthusiasm in the oil market. Oil prices surged 84 cents Wednesday to $14.68 per barrel, on the expectation that key OPEC producers may agree to shave up to 1.5 million barrels a day from current production levels, thereby shrinking supply and bolstering prices. And oil stocks are following, recording some of their biggest gains in months.

Other factors have helped push up crude prices from $12.80 per barrel two weeks ago. Hints of an economic recovery are wafting out of Japan, which could boost world oil demand. Demand for crude this year is expected to grow by 1.2%, or 900,000 barrels per day. A Japanese economic recovery could spur Asian oil demand, which up until last year was the world's primary source of demand growth. That could help push overall demand growth closer to the rates of 2% to 2.5% seen in recent years. At the same time, analysts are forecasting output declines on the order of as much as 400,000 barrels per day from non-OPEC producers this year, due to sharp cuts in capital spending.

Since the news broke Wednesday that key oil ministers would gather in Amsterdam Thursday in an attempt to hammer out production cuts ahead of their regularly scheduled March 23 meeting, consensus has grown that the group will cut production by 1.5 million barrels a day. A cut of that magnitude would eliminate oversupply but wouldn't address the inventory overhang, according to the

International Energy Agency

, a Paris-based energy consulting firm. It also is significant as it illustrates a newfound cooperation and commitment among the major oil producers to bolster sagging prices. But analysts say it will be nowhere near enough to offset the drop in demand for crude in coming months.

For one thing, actual cuts almost never match announced cuts. Compliance with last year's agreement to cut just over 3 million barrels per day was estimated at 77% for last month. So a stated cut of 1.5 million barrels most likely would yield a cut of only 1.1 million barrels.

Then there is the fact that crude demand historically drops in the second quarter, as it falls between the higher-demand winter heating-oil season and the summer driving season. The IEA estimates demand will fall to 73.2 million barrels per day in the second quarter from an estimated 74.9 million barrels per day in the current quarter.

OPEC "might cut production but not by enough to produce a deficit," says Tim Evans, senior oil analyst at

Pegasus Econometric Group

in New York. "Over the course of the second quarter we'll see inventories rising and that gives the market the option of focusing on rising inventories rather then saying, 'Well, OPEC cut, so we've got a bottom in place.'"

Jack Aydin, a managing director in New York at

McDonald Investments

, concurs that expectations are very optimistic, with cuts of up to 1.5 million barrels already priced in. So any disappointment over the meeting's outcome could lead to a drop in prices.

Indeed, it could take cuts of as much as 2 million barrels per day if the oil price rally is to continue, says Phil Flynn, an energy analyst and vice president at

Alaron Trading

, a Chicago commodities trading firm. If the amount is exactly 1.5 million barrels, the market will be disappointed, he says.

Major oil stocks are continuing to fly on expectations of a cut.

Mobil

(MOB)

has powered up 3 5/8, or 4%, to 95. It hit a new 52-week high of 95 7/8 in the morning session.

Chevron

(CHV)

has jumped 3 3/8, or 4%, to 86 5/8. Oil-service stocks opened strongly this morning but closed mainly lower.