Oil prices rose yesterday after OPEC vowed to eliminate overproduction in order to stick by its output ceiling and boost its members revenue. The market was also supported by hopes that the United States Federal Reserve would step in with new stimulus measures to bolster the world's largest economy, traders said. New York's main contract, light sweet crude for delivery in July, climbed 57 cents to $84.48 a barrel. Brent North Sea crude for August delivery gained 41 cents to $97.58 in London midday deals. "Oil futures rose as the Organisation of the Petroleum Exporting Countries (OPEC)  agreed to keep its collective oil output ceiling unchanged" at a meeting in Vienna, Phillip Futures said in a market commentary.
OPEC  decided in the Austrian capital, where the 12 nation cartel is based, to cut total production by 1.6 million barrels per day to meet the group's 30 million mbpd production ceiling agreed last December. Smaller output could meanwhile give a boost to prices. Brent crude oil has tumbled from $128 a barrel in early March - mainly on expectations of weaker demand caused by the eurozone's troubles and a slowing Chinese economy. OPEC secretary-general Abdullah El Badri said that the world economy would not be threatened by oil prices as high as $110 a barrel, despite fears among consumers that more expensive crude would hinder global economic recovery. "About $110 dollars a barrel is not a threat for world economic growth," El Badri told journalists in Vienna yesterday.
OPEC, whose members include Saudi Arabia, Iran and Nigeria, pumps out about one third of the world's oil. Meanwhile, oil fluctuated in New York amid speculation that central banks will take steps to bolster global economic growth. Futures climbed as much as 1.1 percent and dropped 0.3 percent as policy makers from the UK to Japan and Canada stepped up warnings about the threat to world financial markets should Europe fail to contain its debt crisis. Greek elections June 17 may determine whether the country remains in the euro bloc. The Federal Reserve starts a two-day meeting June 19. "It is looking increasingly likely that central banks will take action and increase stimulus," said Phil Flynn, senior market analyst at the Price Futures Group in Chicago. "The Fed has a lot of cover for stimulus and might not even wait for the meeting next week." Crude for July delivery rose 13 cents, or 0.2 per cent, to $84.04 a barrel on the New York Mercantile Exchange. The contract climbed to $84.80 earlier. Prices are down 0.1 per cent this week and 15 per cent this year.