UPDATE 2-Oil slips 0.5pct after record $11 surge to new high

                                
 (Recasts lead, adds quote in para 6, Israeli context para 13)
                                
 By Jonathan Leff
                                
 SINGAPORE, June 9 (Reuters) - Oil edged lower on Monday
after its biggest surge ever, as OPEC's resistance to pumping
more crude kept prices near their record high from Friday, when
the falling dollar and Middle East jitters fuelled an
unprecedented $11 jump.
                                
 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, but stood at $137.79 by 2319 GMT, down 75 cents.
                                
 The contract surged $10.75 or 8.4 percent on Friday,
hitting a new record of $139.12 a barrel amid a buying frenzy
triggered by the slumping dollar and comments by an Israeli
minister about a possible attack on Iran, the world's
fourth-largest producer.
                                
 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 fever, 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 about 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.
                                
 "What's driving this ultimately is compound consumption.
You can't put 40 million cars a year on the road and think
we're going to consume less," said Greg Smith, who manages $500
million in futures as the head of fund Global Commodities in
Australia.
                                
 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 focused on domestic efficiency
and technology as the long-term solution to record oil,
refraining from a call to pump more crude now. [ID:nSP30383]
                                
 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]
                                
 The comments by Shaul Mofaz sparked criticism from defence
officials and political pundits, who said they may be related
to a power struggle in the centrist Kadima party as Prime
Minister Ehud Olmert fights a bribery scandal. [ID:nL08269095]
                                
 DEMAND KEY
                                
 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]
                                
 Some analysts say that the market may be overlooking the
subtle erosion in oil demand, which may not become more visible
until later this year, setting prices up for a sharp pull-back.
                                
 "Until Q4, there certainly appears to be additional spike
risk in an impatient market. But when the data becomes
available, the price action could be as sharp on the way down
as on the way up," analysts at Lehman Brothers said in a
report.
                                
 Asian growth maybe hit soon as governments from Indonesia
to India cut fuel subsidies, while U.S. consumers are being
forced to bear record costs.
                                
 In the world's biggest consumer, whose gasoline use alone
accounts for over a tenth of the world's oil demand, the
average retail gasoline price topped $4 a gallon for the first
time, a survey by the AAA travel group showed on Sunday.
[ID:nN08522275]
                                
 The International Energy Agency (IEA), an adviser to 27
industrialized countries, said it may cut its 2008 demand
growth projection further after having already more than halved
it to 1.03 million barrels per day (bpd).
                                
 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; additional reporting by Bernard
Woodall; Editing by Anshuman Daga)