Ministers from the Organization of the Petroleum Exporting Countries said they raised production limits by 500,000 barrels a day to 27.5 million bpd.

The agreement gives the cartel president power to trigger an additional 500,000 bpd later in the second quarter should prices stay high. Ministers scheduled their next meeting for June 7.

Saudi Oil Minister Ali al-Naimi said Riyadh was aiming to bring crude down to $40-$50 a barrel, the first time the world's biggest oil exporter has advocated support for prices that high. "Current oil price levels of $55 are high and we want prices to be between $40 and $50 a barrel," Naimi told the London-based Arabic-language Al-Hayat newspaper.

"We will increase the ceiling by 500,000 and another 500,000 will be with the president to authorize if prices remain as they are or rise," said group President Sheikh Ahmad al-Fahd al-Sabah of Kuwait.

Crude eased, U.S. futures trading off 37 cents at $54.68 a barrel and London Brent slipping 42 cents to $53.43 a barrel.

"Opec are doing their best but it is a train that is difficult to stop," said Bob Finch, head of trade at independent oil trading house Vitol SA.

Investors from other financial asset classes have plowed into oil and commodities this year, driving U.S. crude to an average $48.87 in the year to date, up $7.40 from the 2004 mean.

"This story is not about the fundamentals, it's about the financials," said consultant Gary Ross of PIRA Energy.

"The investment community is looking beyond the short term fundamentals and wondering whether Opec can meet forward demand growth without prices going sharply higher."

Oil traders will be calculating how much actual extra oil Opec's deal delivers.

Sheikh Sabah said the pact would bring 500,000 bpd of real new supply in April.

Gulf Opec delegates said Saudi Arabia and Kuwait wanted to ensure real volumes were delivered to permit world inventories to build in the spring, when seasonal demand is at its lowest ebb.

The only producers with much spare capacity to tap, the two are ready to pump actual extra volumes of 500,000-700,000 bpd in the second quarter, the delegates said.

They said Gulf producers want to ensure a bigger-than-normal second quarter stockbuild to avoid further upward pressure on oil prices later in the year.

"This deal is about anticipating oil demand next winter," said Glenn Murray of GM oil brokers in Monaco.

"But the jury is out on whether they can store enough oil to meet that demand."