OPEC Secretary-General Abdullah al-Badri said on Friday he saw oil prices at $70 to $75 a barrel by the end of the year, making him the latest official from the group to predict the current rally will persist.
Badri, speaking to reporters the day after the Organization of the Petroleum Exporting Countries decided to keep oil output steady, also said inventory levels would be important in any decision of the group to raise output.
OPEC ministers, including Ali al-Naimi of Saudi Arabia, have said this week the world was ready to cope with oil at $75-$80 and that it could reach that level before the end of the year. It hit a 2009 high above $66 on Friday.
If this current trend continues, this recovery as we see it coming now, I think, by year-end, we'll see prices in the range of $70 to $75 a barrel, Badri told a group of reporters at OPEC's headquarters.
Since last September, OPEC has cut production by a total of 4.2 million barrels per day (bpd) to bolster prices as the downturn erodes demand. It agreed its most recent supply cut at a meeting in Oran, Algeria, in December.
Members have delivered on about 80 percent of those cutbacks and Badri said he did not expect their compliance with OPEC's production targets to slip now that oil prices are rising.
No, I think the ministers are taking the decision of Oran very seriously, he said. They discussed this (adherence to output targets) in a very friendly way and urged each other to further improve the compliance.
While lower OPEC supply was one reasons for the price rally, sentiment was also a factor and Badri said that speculators -- often blamed by OPEC for inflating oil prices -- were coming back into oil and commodities.
It's bullish sentiment of people expecting that the economy will recover faster than they thought, he said. Prices are rising, but when we look at fundamentals we don't see that much support.
Badri said it was too early for OPEC to consider raising production, partly because of high levels of inventory. Stocks are equal to more than 62 days of forward demand in industrialized countries.
But a decline in stocks to 52 days of demand -- a level OPEC would be comfortable with -- might prompt the group to consider raising supplies.
If the prices go high and the stocks go below 52 days, I think OPEC will take a positive decision not to hinder the economic growth of the world, Badri said.
He added he did not expect stocks to fall to that level before the end of the year or the first three months of 2010.
(Editing by Sue Thomas)