UPDATE 1-Oil falls $1 after biggest ever surge on Fri

                                
 (Updates with background, details throughout)
                                
 SINGAPORE, June 9 (Reuters) - U.S. oil prices fell more
than $1 to below $138 in early trade on Monday after rocketing
nearly $11 higher to a record high last Friday, their biggest
ever one-day gain, on the falling dollar and Middle East
jitters.
                                
 U.S. light, sweet crude for July delivery <CLc1> fell as
much as $1.42, or over 1 percent, to $137.12 a barrel in
opening trade on the Global electronic platform. By 2223 GMT,
it was trading at $137.79, down 75 cents.
                                
 The contract surged $10.75 or 8.4 percent on Friday,
hitting a new record of $139.12 a barrel as the slumping dollar
and mounting tension between Israel and Iran fuelled a buying
frenzy.
                                
 A forecast by investment bank Morgan Stanley that oil
prices could top $150 a barrel by the July 4 U.S. holiday added
to Friday's speculative ferver, taking two-day gains to more
than $16 a barrel and reversing two weeks of losses.
                                
 Oil's six-year-long rally has gathered pace this year, with
prices rising more than 40 percent since January as funds hedge
against the dollar and some bet that long-term oil supplies
will struggle to keep up with demand in the decades ahead.
                                
 At the weekend key OPEC officials maintained they saw no
need to consider pumping more oil now, despite the surge.
                                
 "I think there is enough oil in the market, I did not hear
anybody calling for a meeting," Shokri Ghanem, head of Libya's
National Oil Corporation and the country's top oil official,
told Reuters in an interview. [ID:nL08304087]
                                
 OPEC, supplier of more than a third of the world's oil, is
next scheduled to meet on Sept. 9 to discuss oil policy.
                                
 Saudi Oil Minister Ali al-Naimi and his Pakistani
counterpart agreed in a meeting on Sunday that oil's surge was
not linked to fundamentals, the Saudi Press Agency reported.
[ID:NL08317226]
                                
 While consumer nations have often urged the cartel to tame
prices by pumping more crude, Group of Eight energy ministers
meeting in Japan at the weekend urged domestic efficiency and
technology as the long-term solution to record oil, refraining
from a call to pump more crude now. [ID:nSP30383]
                                
 Oil's latest boom has heightened the risk to economic
growth in major consumer countries including the United States,
whose economy already is hobbled by a housing crisis.
                                
 U.S. oil demand is also in decline as high prices bite, but
many traders have focused instead on the falling greenback,
which extended losses on Friday on data showing the U.S.
economy lost jobs for the fifth straight month and the
unemployment rate shot up to its highest in more than three
years. [ID:nN06375191]
                                
 The AAA travel group on Sunday said U.S. average prices for
regular gasoline topped $4 for the first time. [ID:nN08522275]
                                
 Further support last Friday came from remarks by Israel's
transport minister that an attack on Iran's nuclear sites
looked "unavoidable." It was the most explicit threat yet
against Tehran from Prime Minister Ehud Olmert's government.
[nL06903819]
                                
 Some warned of worse to come.
                                
 "I think it will go higher," said Ghanem, who is also head
of Libya's OPEC delegation. "The easy, cheap oil is over, peak
oil is looming."
 (Reporting by Jonathan Leff; Editing by Bernard Woodall)