World's Energy

16.06.2008 - [Neftegaz.RU] - Oil fell more than a dollar to below $134 on Monday as Saudi Arabia prepared to push production to its highest rate in decades, moving to soothe the market ahead of this weekend's crisis meeting over record prices. U.S. light, sweet crude for July delivery was down 85 cents at $134.01 a barrel by 2:45 a.m. EDT, after falling as much as $1.40 a barrel, or about 1 percent, earlier in the session. The contract dropped nearly $2 on Friday, when an industry newsletter reported that Saudi was poised for a big output boost. London Brent crude fell 61 cents to $134.50 a barrel. At the weekend, United Nations chief Ban Ki-moon said the world's biggest exporter was set to increase output to 9.7 million barrels per day in July, the first official indication of its second supply boost in as many months. That would be a rise of 550,000 bpd or over 6 percent since May and would take Saudi crude output to its highest monthly rate since August 1981, according to U.S. government data. Oil traders said the news could spur heavier selling during more liquid European trading hours, but losses may be checked by fears that many refiners -- particularly in Asia -- will balk at buying more of the kingdom's heavier, hard-to-process crude. Saudi King Abdullah "sees that oil prices are currently abnormally high and he is willing to do all that is possible to bring prices to their appropriate levels," state news agency SPA quoted Ban as saying after meeting the Saudi monarch. The Saudi plan comes to light a week before the kingdom hosts an unprecedented meeting of producers and consumers to tackle market instability, its latest effort to turn back a rally that has boosted prices 40 percent this year alone, spurring protests around the world and endangering global economic growth. But some questioned whether Saudi oil would temper prices, which have also been buoyed by fears over whether the world can meet long-term demand for crude and the influx of investment funds seeking a hedge against the dollar and inflation. Saudi Arabia had pledged a month ago to increase supply by 300,000 bpd this month versus May to meet demand from buyers, primarily in the United States, although most OPEC ministers have maintained that the world is not short of crude. Oil had fallen nearly $2 a barrel on Friday after industry newsletter the Middle East Economic Survey reported Riyadh was considering a sizeable output increase to near 10 million bpd. But prices are still double what they were a year ago and have surged six-fold since 2002, and financial leaders fear the rally could worsen the U.S. economic downturn. Saudi Arabia is the only member of OPEC with the spare capacity to boost supplies quickly and significantly. It could pump around 2 million bpd more than it does.