Updated from 10:52 a.m. EDT

Oil prices dropped below $58 Wednesday as energy traders waited for OPEC to hammer out details of its first production cut in over two years and the International Energy Agency trimmed demand projections.

OPEC has agreed to a one million barrel reduction, but is trying to decide whether to shave production from its official daily quota of 28 million barrels or actual output of 27.5 million barrels, Qatar's oil minister said.

There has been some confusion over whether all of OPEC's members will go along with the reduction. On Tuesday, oil prices tumbled after Saudi Arabia's biggest oil company said it will continue sending full crude shipments to its Asian and European customers next month despite the prospect of an OPEC cut beginning Nov. 1.

OPEC sets output quotas among its 11 member countries to better control supplies and global oil prices. For well over two years, the cartel has been pumping at record levels to keep prices low and meet soaring demand.

U.S. Energy Secretary Samuel Bodman plans to speak with OPEC members this week to encourage them to maintain record levels of production,

Bloomberg

reported.

Light sweet crude lost 93 cents to finish the session at $57.59 a barrel after having touched $57.48 intraday, the lowest level since Dec. 27.

Heating oil and gasoline each shed 1 cent to $1.67 a gallon and $1.45 a gallon, respectively. Natural gas dropped 31 cents to $6.15 per million British thermal units.

Prices have been choppy in recent weeks as speculation mounted that the Organization of the Petroleum Exporting Countries would trim output to shore up sluggish prices. The group met as recently as last month and opted to keep pumping the same amounts. But once prices fell below $60, OPEC members decided it was time to boost prices.

Meanwhile, the International Energy Agency reduced its estimates for global oil demand for the second month in a row thanks to mild weather, high oil prices and low natural gas prices. The Paris-based agency now expects consumers worldwide to use 84.57 million barrels per day, down 110,000 barrels from its projection last month.

Next year, 200,000 fewer barrels of crude will be used, down from a previous forecast of 86.02 million.

Brimming fuel supplies, little hurricane activity in the Gulf of Mexico and easing relations with Iran over its nuclear program have helped bring down prices. Crude, gasoline, distillates and natural gas stockpiles are 7% to 18% above the same period last year and are expected to remain high when the U.S. Energy Department releases its weekly supply report on Thursday. The update has been delayed a day thanks to the Columbus Day holiday on Monday.

Analysts polled by

Bloomberg

are expecting to see an increase of 65 billion cubic feet of natural gas and 1.5 million barrels of crude in the agency's update. Inventories of distillates, which include heating oil and jet fuel, and gasoline likely dropped by 125,000 barrels and 450,000 barrels as refiners underwent seasonal maintenance.

Refiners probably operated at 89.5% last week, down 0.4% from the previous week, according to the survey.

Production at

BP's

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Prudhoe Bay oil field rose to 35,000 barrels per day Wednesday. The 800-mile Trans Alaska pipeline was shut down and Prudhoe Bay's daily output fell to 20,000 barrels Tuesday after heavy winds and rains knocked out power. A BP spokesman couldn't say when production would be restored to the usual 350,000 barrels a day,

Bloomberg

reported.

Shares of drillers, refiners, service companies and natural gas producers were down from 0.5% to 2.2% on the Amex Oil, Philadelphia Oil Service and Amex Natural Gas Indices.

Occidental Petroleum

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,

Exxon Mobil

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,

Anadarko Petroleum

(APC) - Get Report

and

Chevron

(CVX) - Get Report

were leading declines by more than 1%.

Only

Repsol

(REP)

and

Sunoco

(SUN) - Get Report

were posting increases on the Amex Oil Index, up by as much as 2%.