Oil Settles Near $135 on Saudi Output Boost
U.S. crude futures slipped on Friday as a report that Saudi Arabia was considering increasing output and a stronger dollar combined to pressure the oil futures complex.
The world's biggest oil exporter is considering bringing output to near record levels of around 10 million barrels per day ahead of a meeting of producer and consumer nations in Jeddah on June 22, the Middle East Economic Survey (MEES) reported.
The kingdom this month is expected to be producing 9.45 million barrels per day (bpd), following an announcement in May that it will increase output by 300,000 bpd.
On the New York Mercantile Exchange, July crude
"Saudi Arabia is trying hard to talk the market down," said John Kilduff, senior vice president at MF Global.
Separately, Saudi Oil Minister Ali al-Naimi, speaking to the state news agency SPA, reiterated that market fundamentals did not justify current prices and that producers and consumers would seek a solution in Jeddah.
"The kingdom called this meeting based on its positive role in international relations ... and its commitment to the world economy and a balanced global oil market," Naimi said.
Oil has jumped 40 percent this year to a record over $139 a barrel, causing global protests against high fuel prices.
Prices have jumped more than six-fold since 2002 as supply struggles to keep pace with demand in emerging markets, especially China and India.
Further support this year has come from a wave of cash from investors seeking a hedge against rising inflation and the falling dollar.
Oil demand growth has shown signs of faltering under high prices. OPEC on Friday became the latest group to cut its forecast for global growth in oil demand in 2008, adding that it is pumping more than the forecast demand for its oil.
The International Energy Agency (IEA) earlier this week cut its demand growth forecast for 2008 to 800,000 bpd.