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SINGAPORE)
LONDON, June 16 (Reuters) - Oil rebounded above $134 a
barrel on Monday after falling sharply in response to plans by
Saudi Arabia to push output to its highest rate in decades.
U.S. light, sweet crude for July delivery <CLc1> was up 4
cents at $134.90 a barrel by 1000 GMT, after falling as much as
$1.40 a barrel, or about 1 percent, earlier in the session.
London Brent crude <LCOc1> was down 28 cents at $134.83.
United Nations chief Ban Ki-moon said over the weekend that
Saudi Arabia, the world's biggest oil exporter, was set to
increase output to 9.7 million barrels per day in July, its
second supply boost in as many months. []
That would be a rise of 550,000 bpd or over 6 percent since
May and would take Saudi output to its highest monthly rate
since August 1981, according to U.S. government data.
Saudi plans emerged ahead of a meeting of oil producers and
consumers on June 22 to find a solution to record oil prices
that have caused consumer protests in Asia and Europe.
Some analysts view Saudi output increase as a signal that
other members of the Organization of the Petroleum Exporting
Countries might follow.
"I think OPEC will add more barrels next week and it will
have to be significant enough for the world to stand up and take
notice," said Rob Laughlin, analyst at futures broker MF Global.
CONSUMER PROTESTS
Saudi Arabia's invitation to producers and consumers to meet
in Jeddah this weekend is in response to the growing protests
from consumers over record oil prices that could threaten the
health of the global economy.
Oil has doubled in the last year and risen 40 percent since
the start of this year, boosted by expectations that supply will
struggle to meet demand from newly industrialising countries
such as China and India.
The weak U.S. dollar and investment inflows have contributed
to oil's advance to a record of nearly $140 a barrel this month.
The rapid price increase has spurred demands from
politicians to introduce curbs on so-called speculators in the
oil futures markets.
The world's richest nations, which met in Japan at the
weekend, warned that soaring commodity prices could cut economic
growth, but stopped short of offering any plan to calm markets.
Some analysts questioned whether Saudi Arabia's plan to pump
more oil would temper prices.
"If they want to put pressure on prices they need
substantial price discounts that would encourage greater stock
building," said David Kirsch of Washington-based PFC Energy.
Saudi Arabia had pledged a month ago to increase supply by
300,000 bpd this month versus May to meet demand from buyers,
primarily in the United States.
Saudi Arabia is the only member of OPEC with the spare
capacity to boost supplies quickly and significantly. It could
pump around 2 million bpd more than it does.
(Reporting by Jane Merriman in London and Jonathan Leff in
Singapore; editing by James Jukwey)
