OPEC set to hold output steady, hopes for price rise

By Rania El Gamal and Barbara Lewis

VIENNA (Reuters) - OPEC ministers set their sights on oil prices above $70 a barrel as they gathered for talks in Vienna, but they were expected to hold output steady and rely instead on economic recovery to push the market up.

Saudi Arabian Oil Minister Ali al-Naimi said on Wednesday the world was ready to cope with oil at $75-$80 a barrel, the price range the leading oil exporter considers enough to sustain energy investment for the long term.

He said it could be reached before the end of this year.

Previously, Saudi Arabia signaled it could live with oil around $50 to help nurse the economy back to health.

Oil has already climbed from a low of $32.40 last December to six-month highs above $63 a barrel on Wednesday.

"The price rise is a function of optimism better things are coming in the future," Naimi told reporters.

"We see offshoots of recovery," he added. "There are a lot of positives in what I say because I am seeing a recovery."

Representing the world's biggest fuel consumer, the U.S. government's Energy Information Administration said too high an oil price could damage a fragile economy.

"I certainly would think that we are still in some pretty thick economic woods and that it would make sense to not push things with respect to the oil market," Howard Gruenspecht, acting head of the EIA, said on Wednesday.

"Keeping oil markets well supplied is pretty important."

U.S. President Barack Obama and Saudi King Abdullah were expected to discuss oil prices at a meeting next week in Riyadh.

Naimi said Thursday's meeting of the Organization of the Petroleum Exporting Countries in Vienna did not need to change the group's output policy.

Saudi Arabia has always been regarded as a moderate and ally of the United States. Venezuela, by contrast, which has big social spending plans to finance, has typically been among the first to seek higher prices.

On arriving in Vienna on Wednesday, Venezuelan Oil Minister Rafael Ramirez said he hoped oil would reach $75 in the fourth quarter, but was concerned about "very, very high" levels of inventory.

He did not expect OPEC to change its supply targets, but said it should focus on stronger output discipline.