LONDON Oil prices crept higher on Friday after the three-month extension of OPEC output caps and early signs of a global economic recovery that signaled a coming rise in demand for oil.

Benchmark Brent crude was up 13 cents at $25.58 a barrel while August New York Mercantile Exchange light crude futures last traded one cent weaker at $26.85.

The Organization of the Petroleum Exporting Countries (OPEC) decision on Wednesday to maintain output limits in the third quarter has supported prices, but gave no runaway strength.

However, oil prices are around a dollar higher than last Friday, trading on a firm floor supplied by the oil producing cartel's decision at its meeting in Vienna to spare some six million spare barrels of daily oil from export, Reuters reported.

The spare export capacity boosted fears that crude prices might rise to $30 a barrel later this year even as demand was seen on the rise in tandem with a partial economic recovery.

On Thursday, the leaders of the world's richest countries said they were confident in economic growth prospects despite an economic slowdown affecting much of the world.

"We expressed confidence in our economies and in the prospects for global growth," Canadian Prime Minister Jean Chretien said in a statement after a two-day summit in Canada of the leaders of the Group of Eight industrialized countries.

Analysts watching the global economy's effect on oil demand also awaited new OPEC policy ahead of its September meeting.

"The pace of the world economic recovery remains sharply in focus as will supply/demand pressures for additional OPEC volumes which...are anticipated for the latter half of (this year)," said Merrill Lynch's Michael Rothman in a research note.

OPEC's 10 quota-bound members would raise output in the fourth quarter if forecasts of economic growth in consumer nations materialize, according to a senior OPEC official on Thursday.

"Most predictions indicate demand growth of 1.5 to 2.0 million barrels a day between the third and fourth quarter and that would be enough for OPEC to say let's raise production," the official said.

U.S. consumption of fuel traditionally peaks in the summer due to increased vacation travel.

Traders said the market would now watch for signs that OPEC will stick to its pledge to comply with quota ceilings.

Independent analysts say the group has been leaking about 1.5 million barrels per day (bpd) more than the prescribed quotas.

Venezuela, recently reported as planning to raise output over OPEC quotas to help patch a hole in its government budget, promised it would stick to its output quotas.

Ali Rodriguez, the outgoing OPEC secretary general and new head of state-owned oil firm Petroleos de Venezuela, said the cuts were still a price worth paying to support world oil markets and avoid a price war.