UPDATE 6-Oil falls on Saudi output hike plan

                                
 (Updates throughout, changes dateline from LONDON)
                                
 NEW YORK, June 17 (Reuters) - Oil prices slipped from
record highs on Tuesday on plans by top exporter Saudi Arabia
to increase crude output to help curb soaring fuel costs.
                                
 The move by the OPEC kingpin came as American and British
regulators imposed position limits on U.S. crude contracts on
the London-based ICE exchange amid concerns speculators are
pushing prices above levels supported by supply and demand.
[nN17345171]
                                
 U.S. crude <CLc1> fell $1.25 to $133.36 a barrel by 1:41
p.m. EDT (1741 GMT), after hitting a record $139.89 on Monday.
London Brent crude <LCOc1> traded $1.25 lower at $133.46 a
barrel.
                                
 United Nations chief Ban Ki-moon said over the weekend that
Saudi Arabia was set to raise its oil output to 9.7 million
barrels per day in July, up 550,000 bpd from May.
                                
 The plan comes ahead of a June 22 meeting between oil
producing and consumer nations in Saudi Arabia as protests
against high fuel costs spread across the globe.
[ID:nL16333726]
                                
 "The Saudis seem quite willing to supply the market with
more, despite their OPEC brethren's objections at a time when
average gasoline prices around the country are moving beyond
$4," Mike Fitzpatrick of MF Global said in a research note.
                                
 "Under these conditions, oil looks less and less
attractive."
                                
 Oil prices have jumped nearly seven-fold since 2002 as
strong demand from emerging economies such as China stretches
global production.
                                
 In addition, a surge in speculative buying by investors
hedging against inflation and the weak dollar has helped fuel a
40 percent rise in prices in 2008 alone.
                                
 The increase in Saudi Arabian oil production, as well as
the new regulatory scrutiny, could scare off some investors and
bring down prices, according to analysts. [nN17342912]
                                
 Before the Saudi plan, members of the Organization of
Petroleum Exporting Countries had insisted that oil's record
rise this year was driven by speculation.
                                
 U.S. Energy Secretary Sam Bodman has repeatedly said
fundamentals were driving the market, and called upon OPEC to
help consumer nations by raising production rates.
                                
 Billionaire oil tycoon T. Boone Pickens played down the
role of investors in crude markets on Tuesday, arguing prices
were rising as world oil production peaks. [nN17340584]
                                
 "I do believe you have peaked out at 85 million barrels a
day globally," Pickens, who heads BP Capital hedge fund, told
the Senate Energy and Natural Resources Committee.
                                
 "Demand is about 86.4 million barrels a day, and when the
demand is greater than the supply, the price has to go up until
it kills demand."
                                
 The market will also look toward U.S. oil inventories data
due on Wednesday, which is expected to show U.S. crude stocks
down for the fifth week in a row as imports dipped, an expanded
Reuters poll of analysts showed on Tuesday. [EIA/S]
                                
 On average, analysts called for a drop of 700,000 barrels
for crude, and an increase of 1.1 million barrels for gasoline
and 1.5 million barrels for distillates.
 (Reporting by Matthew Robinson, Robert Gibbons, and Gene Ramos
in New York; Jane Merriman in London and Baizhen Chua in
Singapore; Editing by Walter Bagley)