Oil prices rose slightly yesterday after a source based in the oil-rich Gulf region said momentum was building within the OPEC cartel for a fourth production cut this year to prop up markets.

The source, who asked not to be named, said the oil exporting cartel was leaning towards a production cut of 700,000 to one million barrels per day to take account of slower demand growth since the September 11th attacks on the US.

European benchmark Brent Blend crude oil climbed 21 US cents to $21.78 per barrel by mid-session, while US oil futures inched seven US cents higher to $22.52. Turnover was extremely thin as traders said they preferred to sit on their hands while US military retaliations were under way.

The Afghanistan raids have had little impact on oil markets as Middle East oil continues to flow normally. But traders said they were wary of any spread of the conflict to Iraq, the world's seventh biggest exporter.

Oil prices have slumped by a quarter since the suicide air attacks on New York and Washington, as fears of slowing demand growth have outweighed concerns about oil supply security from the Middle East. Demand for aviation fuel has evaporated, and growing US inventories of crude oil and gasoline show the world's biggest consumer is using less oil.

The OPEC export price has spent more than two weeks below the cartel's $22-$28 per barrel target, and stood at $19.75 per barrel on Monday, according to the group's Vienna secretariat.

The Gulf source said some cartel members wanted a cut now to return its price to the central $25 level, while others wanted to wait until the US retaliation against Afghanistan was over. The 10 OPEC members with output restrictions, excluding Iraq which is under UN sanctions, have slashed output three times this year as demand forecasts have been revised downwards, and now have a ceiling of 23.2 million barrels per day.