(Updates prices)
LONDON, June 16 (Reuters) - Oil surged to a new record high
on Monday of nearly $140 a barrel, propelled by weakness in the
dollar which offset the bearish impact of plans by Saudi Arabia
to boost output.
U.S. light, sweet crude for July delivery <CLc1> was up
$2.01 at $136.87 a barrel by 1550 GMT, off a record high of
$139.89. Earlier in the session, it fell as much as $1.40 a
barrel on hopes of increased Saudi supplies.
London Brent crude <LCOc1> was up $1.74 at $136.75.
Prices leapt as the dollar fell after publication of data
from the New York Federal Reserve that showed manufacturing in
the state of New York contracted in June for the fourth time in
five months []
"Prices rose sharply in three minutes. U.S. manufacturing
data was weak, so it is pressuring the dollar down," said Mike
Wittner, energy analyst at Societe General.
Earlier in the session, prices had dropped back after 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.
After intially pressuring prices lower, doubts began to
emerge on how much the Saudi output increase would dampen
prices, with many traders reporting very little interest in
Saudi crude at current prices.
"The (Saudi) move does not seem to be enough to reverse the
recent strength in prices, as it does little to repeal the
longer-term expectations for tight demand-supply balances on the
back of robust non-OECD demand and faltering non-OPEC supply,"
Barclays Capital said in a research note.
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 and Ikuko Kao in London and
Jonathan Leff in Singapore; editing by James Jukwey)
