May 28 (Bloomberg) -- OPEC is likely to leave production quotas unchanged at today’s meeting in Vienna in a bet that demand will recover, pushing prices as high as $75 a barrel by year’s end, ministers said.

Officials from five of the 12 members of the Organization of Petroleum Exporting Countries said before the start of today’s closed-door assembly they supported leaving output targets unchanged, as the group did at its last conference in March. They will push instead for better compliance with targets set late last year.

“We should not make it more difficult for the world economy,” Shokri Ghanem, chairman of Libya’s National Oil Corp., said today in Vienna. OPEC is therefore unlikely to opt for more cutbacks, even as it sees “a lot of overhang in the market.”

Ghanem echoed comments yesterday from Ali al-Naimi, oil minister for Saudi Arabia, OPEC’s biggest and most influential member. OPEC should “stay the course” because there are signs that fuel demand in rising in Asia, al-Naimi said.

Crude oil for July delivery fell as much as 1.1 percent to $62.75 a barrel on the New York Mercantile Exchange and was at $63.44 at 10:45 a.m. in London. Yesterday, futures touched $63.82, the highest since Nov. 10, and prices are up 42 percent this year. Oil rose above its 200-day moving average for the first time since September, a signal that prices will rally further, according to technical traders.

Closed-Door Meeting

Ministers arrived at OPEC’s Vienna headquarters by 10:30 a.m. local time to attend the closed-door meeting. OPEC has already scheduled another Vienna assembly for Sept. 9.

Some members of OPEC, which produces about 40 percent of the world’s crude, are still wary of oversupplying the oil market. Al-Naimi acknowledged that he has yet to see signs that demand for oil is increasing in Europe or the U.S., the world’s biggest oil consumer.

Libya’s Ghanem said OPEC is concerned this year’s increase in oil prices was driven by increasing optimism about an economic recovery rather than the supply and demand for oil.

“Prices are moving because the speculators are back,” he said today. “Fundamentals do not tally with psychology.”

U.S. crude oil inventories rose to the highest level in two decades earlier this month, while the International Energy Agency says global demand is falling the most since 1981.

‘Cut Is Required’

“A cut is required,” Johannes Benigni, managing director of JBC Energy GmbH, said today in an interview from Vienna. OPEC “may communicate the cut some months later, once it has been implemented” as they may want to keep prices stable rather than “fire them up.”

OPEC members need to complete the production cutbacks set last year because oil prices haven’t yet reached the desired level of $70 to $75 a barrel, OPEC President Jose Maria Botelho de Vasconcelos said yesterday.

While price gains in recent days are “positive signs,” they don’t provide “absolute tranquility” for oil-producing nations, Botelho de Vasconcelos, who also is Angola’s oil minister, said from the airport.

OPEC has yet to complete production cuts totaling 4.2 million barrels a day that the group agreed to late last year. The production ceiling is 24.845 million barrels a day for 11 of its members. Iraq has no quota.

Those 11 nations pumped 25.81 million barrels a day in April, an increase of about 225,000 from March and the first increase in nine months, according to OPEC’s latest monthly report. That means the group has completed 77 percent of its cuts, down from a revised 82 percent for March.

‘Lagging Quota Compliance’

Venezuela is working to clarify its OPEC production quota after an audit of the country’s exports showed output is higher than the group estimated, Oil and Energy Minister Rafael Ramirez said yesterday in Vienna.

Saudi Arabia is the only member so far to have curbed production to below its national quota. Angola, Venezuela and some other OPEC members have complained that the group’s method of measuring cuts by using independent production estimates is inaccurate.

“Lagging quota compliance by the non-Gulf Arab states -- hovering around 50 percent - has hamstrung any real discussion of a potential cut to accelerate the drawdown of the glut,” according to a PFC Energy report provided yesterday by analyst David Kirsch, who is in Vienna. “Purported requests by Angola to revise or suspend its quota, as well as moves by Venezuela to certify a higher production figure, leave any proposal for further output restraint effectively stillborn.”

‘Why do Anything?’

Twenty five out of 27 analysts surveyed by Bloomberg last week said they expected OPEC to leave existing quotas unchanged at this week’s Vienna meeting. The Saudi minister said he doesn’t expect OPEC to hold another meeting before September.

Al-Naimi said yesterday he is “confident” oil prices will return to about $75 a barrel by this year’s third or fourth quarter. “If demand picks up, then why do anything?”

Oil is likely to rise to $80 as the growth trend in fuel demand outpaces supply, according to Paul Horsnell, head of Barclays Capital commodities research.

“It’s very tempting for it to be written that there was a commodities boom and now there’s a bust and now we’re back where we were,” he said yesterday in an interview. “We’re definitely not back to where we were.”

To contact the reporter on this story: Ayesha Daya in Vienna at adaya1@bloomberg.netFred Pals in Vienna at fpals@bloomberg.net

Last Updated: May 28, 2009 05:47 EDT