Opec production targets unchanged

Opec agreed to freeze oil production targets due to economic downturn

Oil producers have decided to leave production targets unchanged as the price of crude remained at six-month highs.

A meeting of the Opec oil cartel in Vienna agreed to freeze levels of output, citing the state of the global economy and warned that stock levels still outstripped demand.

Ministers from the 12-nation production group said the weakness in demand for oil - caused by the world recession - was likely to continue "for some time".

In a statement the cartel "reiterated their firm commitment" to the quotas - despite organisation members still producing more than 800,000 barrels a day above the group's overall target level of just under 25 million barrels.

"Although some recent positive economic indicators point towards the possibility of the recession bottoming-out before year-end, the world is nevertheless still faced with weak industrial production, shrinking world trade and high unemployment: for this reason, the conference decided to maintain current production levels unchanged for the time being," the group said.

The decision came as crude oil for July delivery hit 63.43 dollars a barrel on the New York Mercantile Exchange - just off Wednesday's half-year high of 63.45 dollars.

Oil prices have jumped from below 35 US dollars a barrel in March on investor expectations that the worst of the global economic slowdown is over. Prices peaked at 147 dollars a barrel last year before the recession hit.

Opec has announced 4.2 million barrels a day of production cuts since September as it looked to stabilise prices.

The cartel said it was "pleased" to see that its decisions had had a positive effect on bringing prices under control, but warned that crude volumes entering the market still exceeded demand. It said commercial oil stock levels at the end of April were close to the record high seen in February 1998.

Opec's move to keep production at current levels was widely anticipated by traders. On Wednesday Iran's oil minister Golam Hossein Nozari said he expected Opec to keep output at present levels. And investors have reacted to comments from Saudi Arabia's oil minister Ali Al-Naimi that a recovering global economy could cope with oil prices of up to 80 dollars a barrel.