(Recasts to include Iraq supplies, updates prices)
By Santosh Menon
LONDON, June 2 (Reuters) - Oil fell more than $1 to near
$126 on Monday, extending losses from last week on a firming
dollar, selling by funds and on prospects of increased Iraqi
crude supplies.
U.S. light, sweet crude oil futures <CLc1> fell $1.75 to
$125.60 a barrel by 1234 GMT, extending last week's nearly $5
tumble as traders continued to take profits from a recent rally
to a record high above $135.
London Brent <LCOc1> fell $1.78 at $126.
"It doesn't look like we are going to see any sharp
movements one way or the other today. We'll probably see just a
continued softening today from the trend we've seen last week,"
said Simon Wardell, oil analyst at Global Insight in London.
The dollar edged up against the euro on Monday, even as many
investors awaited U.S. data this week to see if the reports
reinforce expectations for higher interest rates.
The U.S. greenback has rebounded against the euro on the
prospect of the Federal Reserve eventually lifting rates. The
dollar scored back-to-back monthly gains against the euro in
April and May for the first time since early 2007. []
Traders said the oil price fall was also helped by news of
increased supplies from Iraq.
Iraq expects to boost oil exports this month to a new
post-war high of about 2.2 million barrels per day (bpd) --
about 130,000 barrels a day higher than in May -- and sustain
rates near that level for the rest of the year. []
ALL-TIME HIGH
Oil hit an all-time high of $135.09 a barrel on May 22,
boosted by rising flows of cash from investors and concerns
supplies will struggle to match demand longer term, but a series
of fuel price hikes across Asia and protests in Europe last week
has shifted focus to the potential for weakening consumption.
Demand in consuming nations such as the United States and
Britain has already showed signs of faltering under the weight
of rising fuel costs, and some analysts are concerned demand in
some Asian countries could be hit as governments cut subsidies.
While the world's number-two consumer China is resisting
raising prices until after the August Olympics, other countries
including Taiwan, Indonesia and Sri Lanka have been forced to
hike pump rates as governments struggle to fund subsidies.
India is expected to raise prices slightly this week.
Oil traders are also bracing for the possibility of more
market surveillance by U.S. regulators, under political pressure
to stem the rise in prices, a move they fear may shake some
speculators out of the market.
Speculators cut their net long positions in crude oil to
25,867 in the week to May 27, down from 50,060 in the previous
week, data released by the U.S. Commodity Futures Trading
Commission (CFTC) showed last week.,
The CFTC said last week that it was investigating oil-market
trading.
(Additional reporting by Jonathan Leff and Maryelle
Demongeot in Singapore, editing by William Hardy)
