(Updates details)
NEW YORK, June 16 (Reuters) - Oil hit a record near $140 a
barrel on Monday on weakness in the U.S. dollar and an
emergency shutdown of a North Sea oil production platform that
stirred supply worries.
The rally came despite expectations top world oil producer
Saudi Arabia will soon boost output to its highest rate in
decades amid calls from consumer countries like the United
States for more output to ease an economic downturn.
"The week has started off with a bang, ... apparently on
participants' lack of confidence in the Saudi's ability to stem
rising prices," John Kilduff, senior vice president at MF
Global wrote in a note.
U.S. light, sweet crude for July delivery <CLc1> was up
$2.01 at $136.87 a barrel by 1630 GMT, off a record high of
$139.89 set earlier in the session. London Brent crude <LCOc1>
was up $1.54 at $136.55.
Prices leapt as the dollar fell versus the euro, snapping a
three-day winning streak, amid expectations the European
Central Bank will hike interest rates to fight inflation.
Commodities markets tend to have an inverse relationship
with the dollar as it impacts the purchasing power of buyers
using other currencies.
Dealers added that the shutdown of Norwegian oil producer
StatoilHydro's Osenberg A oil platform in the North Sea due to
a fire was also encouraging buying.
Earlier in the session, prices had dipped into negative
territory after United Nations chief Ban Ki-moon said over the
weekend that Saudi Arabia 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.
U.S. Energy Secretary Sam Bodman said Monday the United
States, the world's largest energy consumer already hard-hit by
soaring gasoline prices and a slumping housing market, would
welcome the move. []
Saudi Arabia's 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 widespread consumer protests.
Some analysts said, however, the move may not be enough to
stem oil's rally.
"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.
U.S. oil refiners said on Monday that they would not be
interested in buying any additional Saudi oil unless the price
was steeply discounted. []
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.
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.
The rapid price increase has spurred demands from
politicians to introduce curbs on so-called speculators in the
oil futures markets.
(Reporting by Jane Merriman and Ikuko Kao in London and
Jonathan Leff in Singapore; editing by Marguerita Choy)
