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VIENNA — OPEC oil ministers on Thursday kept output targets unchanged in hopes a recovering world economy will raise prices through increased demand — and thus eliminate the need for them to cut back production.
An OPEC statement said the organization "decided to maintain current production levels unchanged for the time being."
Oil producers reiterated their "firm commitment" to their existing quotas, in an effort to trim oversupply.
Most organization members are supposed to honor individual production targets, but the organization is still pumping more than 800,000 barrels a day above its overall target level of just under 25 million barrels.
While 100 percent compliance with quotas is unlikely, even an additional 10 percent compliance would take more than 400,000 barrels a day off markets, slicing into near record stocks in storage while reducing the price shock that an outright cut in production could cause.
The decision not to change production targets appeared due to belief that the U.S. — the world's largest oil consumer — is gradually emerging from a severe recession and that demand there will support oil prices.
"We are seeing a light in the end of the tunnel," said OPEC Secretary General Abdalla Salem El Badri.
"We don't want to give a wrong signal to the market," he added, when asked why the Organization of the Petroleum Exporting Countries decided against cutting production despite their concerns about significant oversupply and anemic demand from the U.S. and other major consumers hobbled by the recession.
OPEC President Jose Maria Bothelo de Vasconcelos — who is also oil minister of Angola — voiced the same message. He said the decision to maintain targets "sends a signal of the optimism that all members of the organization are currently feeling" about the chances of an approaching economic upturn.
A barrel of crude already fetches more than $60 compared to levels near $30 just four months ago. And that spike has come despite continued anemic worldwide demand, plentiful supply, and gloomy future forecasts.
Market reaction appeared to support Thursday's decision. Benchmark crude for July delivery was essentially steady shortly after the end of the OPEC meeting, fetching $63.42 a barrel by early afternoon in Europe in electronic trading on the New York Mercantile Exchange.
Prices have not been at that high level since early November.
Still, despite the decision to maintain present targets, OPEC ministers have repeatedly saying they would like to see crude rise to around $80 a barrel, even while being content to let economic factors do their work for them.
"OPEC is trying to get the world more conformable with the idea of $75-80 oil," said Jonathan Kornafel, Asia director for market maker Hudson Capital Energy in Singapore.
Instead of being powered by demand, analysts say oil prices have risen because of rising international stock markets, taken as a signal of recovery.
About 74 percent of the forecasters in a survey by the National Association for Business Economics in the U.S. expect the recession, which started in December 2007, to end in the third quarter. Another 19 percent predict the turning point will come in the final three months of this year and the remaining 7 percent believe the recession will end in the first quarter of 2010.
As well, some investors have been pushing up the price of oil by buying it as a hedge against a weaker U.S. dollar.
"As long as money is being printed left and right you're going to see it flow into the commodity markets and crude (will) keep going higher," Kornafel said.
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Associated Press Writer Alex Kennedy in Singapore contributed to this report.
