Oil prices slip in anticipation of Saudi output hike

ABS-CBN News

Posted at Jun 18 2008 03:55 AM | Updated as of Jun 18 2008 11:55 AM

Agence France-Presse

NEW YORK - Oil prices on Tuesday extended their retreat from record highs amid profit taking ahead of Saudi Arabia's expected output increase.

New York's main oil futures contract, light sweet crude for July delivery, slipped 60 cents to close at 134.01 dollars per barrel.

In London, Brent North Sea crude for August delivery fell 99 cents to settle at 133.72 dollars.

Both futures contracts on Monday hit all-time peaks approaching 140 dollars a barrel before pulling back to close lower.

Trading Tuesday was less volatile than in previous sessions, with the downward trend maintained throughout most of the session.

"The Saudis seem quite willing to supply the market with more, despite their OPEC brethren's objections at a time when average gasoline prices around the country (US) are moving beyond 4.00 dollars (a gallon). Under these conditions, oil looks less and less attractive," said Mike Fitzpatrick at MF Global.

United Nations secretary general Ban Ki-Moon announced on Sunday that Saudi Arabia had told him it would increase its oil output by a further 200,000 barrels a day in July. It was not clear whether Khatibi was reacting to these comments.

The UN chief's remarks sparked speculation about the prospects of an easing of tight crude oil supplies ahead of a meeting organized by Saudi Arabia Sunday of major oil producers and consumers to discuss skyrocketing oil prices that are weighing on global economic growth.

Iran said Tuesday it would be opposed to any move by Saudi Arabia, the largest oil producer in the Organization of Petroleum Exporting Countries, to raise its oil output without a consensus from fellow members of the oil cartel.

"If Saudi Arabia takes a measure to unilaterally increase (oil) output, it is a wrong move," Mohammad Ali Khatibi, Iran's new representative to OPEC, was quoted as saying by the state television website.

Iran is OPEC's number two producer, behind the Saudis, and has consistently argued that the high oil price has nothing to do with market fundamentals and OPEC's output should not be increased.

Earlier on Tuesday, Iranian President Mahmoud Ahmadinejad said that the current high price of oil was artificial and the market was well supplied.

"The rise in consumption is lower than the rise in production," Ahmadinejad told a meeting in Isfahan of OPEC's fund for international development.

"Certain hands, for political and economic ends, are controlling the price in an artificial manner," he said.

OPEC, which pumps about 40 percent of oil supplies and has been widely blamed for the five-fold rise in prices since 2003, insists the oil market is well supplied.