(Updates prices with settlements)
By Richard Valdmanis
NEW YORK, June 16 (Reuters) - Oil prices eased on Monday as
top world producer Saudi Arabia appeared poised to boost
production to the highest level in decades to ease a record
rally that has threatened global economic growth.
The dip into negative territory came after a brief surge
earlier in the session to a record high near $140 a barrel,
triggered by weakness in the U.S. dollar and an emergency
shutdown of a North Sea oil platform.
"After today's rally to near $140, people are reassessing
the situation, noting that we may be getting more barrels from
OPEC and mindful that the Saudis are hosting a summit of
producers and consumers this weekend," said Andy Lebow, oil
analyst at MF Global in New York.
U.S. light, sweet crude for July delivery <CLc1> settled
down 25 cents at $134.61 a barrel, off a record high of $139.89
set earlier in the session. London Brent crude <LCOc1> fell 40
cents to $134.71.
Oil prices have surged about 40 percent in wildly volatile
trade since the start of the year and are up nearly seven-fold
since 2002, propelled by rising demand in China and other
developing nations.
United Nations chief Ban Ki-moon said over the weekend that
Saudi Arabia, under pressure from consumer nations calling for
more supplies, was set to increase its oil output to 9.7
million barrels per day in July. []
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. []
The rapid price increase has also spurred demands from
politicians to introduce curbs on so-called speculators in the
oil futures markets. Investors have rushed into commodities
this year as a hedge against the weak dollar and inflation.
Prices had leapt earlier in the day as the dollar fell
versus the euro amid expectations the European Central Bank
will hike interest rates to fight inflation.
Dealers added that the shutdown of Norwegian oil producer
StatoilHydro's Osenberg A oil platform in the North Sea due to
a fire had also encouraged some buying.
(Additional reporting by Jane Merriman and Ikuko Kao in London
and Jonathan Leff in Singapore; editing by Jim Marshall)
