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NEW YORK - World oil prices rebounded from recent heavy losses Tuesday to reach 82 dollars a barrel, as the US Federal Reserve kept interest rates on hold.
On the eve of an OPEC production meeting, New York's main contract, light sweet crude for April delivery rallied above 82 dollars per barrel, before ending the day at 81.70, up 1.90 dollars from Monday's closing level.
London's Brent North Sea crude for April delivery was up 1.13 dollars at 79.02 dollars.
"Crude recovered its losses from yesterday, and even more," said Andy Lipow of Lipow Oil Associates, adding that the weakening dollar was pushing investors into commodities.
"I think that by the end of the year we're going to see crude oil prices in the 90 to 95 dollars, as the global economy recovers and we see decline in production in many areas in the world."
The Federal Reserve on Tuesday maintained record low interest rates in the hope of stimulating a still fragile US economic recovery, dogged by high unemployment and tight credit.
Oil also rose on the back of the weak dollar, which fell against the euro after news of unexpectedly strong German investor sentiment.
Dollar-priced crude wins support from a struggling greenback because it makes crude cheaper for buyers using other currencies. In turn, that usually stimulates demand.
Oil also won ground amid concerns about US energy demand and possible Chinese moves to cool its booming economy.
"Fundamentals (of supply and demand) will be back in focus again also as OPEC meets tomorrow in Vienna where we expect the exporting group to leave output policy as is," said VTB Capital analyst Andrey Kryuchenkov.
He added that such a move would help "reduce swollen stockpiles and support prices in the second quarter of 2010".
The Organization of Petroleum Exporting Countries (OPEC) was widely expected to maintain its official oil output quota of 24.84 million barrels a day when it meets in the Austrian capital on Wednesday.
"This is going to be an easy meeting," UAE Minister of Energy Mohammad bin Dhaen al-Hamli told reporters on Tuesday after fellow OPEC member nations said there was no need to change the cartel's official production target.
Members have pointed to high oil inventories, insufficient demand and acceptable crude prices for the reasons why OPEC does not need to change its output ceiling.
"There is no need to raise output... Kuwait favors maintaining production quota," Kuwaiti Oil Minister Sheikh Ahmad Abdullah al-Sabah said on Tuesday before heading to Vienna -- home to OPEC's headquarters.
However Kuwait, like other OPEC members, is calling for greater compliance with the cartel's official production ceiling as data shows that the organization is pumping more than its set target.
"Kuwait will push for more (output) compliance ... that's the major issue" at the upcoming OPEC ministerial meeting, said Sheikh Ahmad.
OPEC members are keen for greater compliance with the official output quota amid concern that demand for oil could weaken as governments look to end unprecedented measures that have put countries on a road to economic recovery.
- AFP /ls
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