UPDATE 1-Oil extends losses, more convinced on Saudi output

                                
 (Updates prices in para 2 and 3)
                                
 By Chua Baizhen
                                
 SINGAPORE, June 18 (Reuters) - Oil fell for a fourth day on
Wednesday, as more investors appeared convinced that top
exporter Saudi Arabia's plan to boost supply could tame prices.
                                
 U.S. crude futures for July <CLc1> fell 31 cents to $133.70
a barrel by 0702 GMT, taking four-day losses to over $3 a
barrel or 2.2 percent. The contract briefly hit a record of
nearly $140 on Monday.
                                
 London Brent crude <LCOc1> slipped 42 cents to $133.30.
                                
 Oil traders initially gave a muted response to news that
Saudi Arabia was poised to pump oil at its fastest rate in
decades next month, but analysts said increasing evidence of
more crude is gradually shifting sentiment.
                                
 "I'm surprised prices didn't fall further ... if the Saudis
discount their oil significantly, I think U.S. refiners will
really start to buy and start building inventories," said
Robert Nunan, a risk manager at Mitsubishi Corp in Tokyo.
                                
 U.S. crude oil stock data due later in the day is expected
to fall by 1.5 million barrels last week, a fifth consecutive
draw, a Reuters survey showed.
                                
 Analysts are expecting a rise of 800,000 barrels for
gasoline and 1.8 million barrels for distillates. [EIA/S]
                                
 While many analysts questioned whether the Saudis would
find willing buyers for its oil at current prices, India's
Reliance Industries said on Tuesday it was already committed to
buy 30 percent of the additional Saudi crude in July, after
lifting the same proportion of extra supplies this month.
[ID:nBM41735]
                                
 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, a move whose
rationale and effect has been questioned by some OPEC members.
[ID:nL17602334]
                                
 Eyes are now on the Saudi-called emergency meeting between
oil producing and consumer nations on June 22 to address the
sky-high prices, which have led to protests against high fuel
costs across the world. [ID:nL16333726]
                                
 Oil prices have jumped nearly seven-fold since 2002 as
strong demand from emerging economies such as China stretches
global production. A surge in speculative buying by investors
hedging against inflation and the weak dollar has accelerated
the rally this year, pushing prices nearly 40 percent higher
since January.
                                
 While Saudi moves to dampen markets by pumping more oil,
U.S. and British regulators unveiled a plan to slap position
limits on U.S. crude contracts on the London-based ICE exchange
to rein in speculators. [ID:nN17388987]
                                
 The combined effort among Saudi Arabia, the United States
and Britain could rattle some investors and bring down prices,
analysts said. [ID:nN17342912]
                                
 But 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. [ID:nN17340584]
                                
 Oil's fall was cushioned by the softening dollar, which
slipped on Tuesday as U.S. housing starts fell to a 17-year
low, casting more doubts over how much the U.S. Fed might boost
interest rates in coming months.
                                
 The dollar has since steadied against the yen on
Wednesday.
 (Editing by Ben Tan)