``The increase in prices isn't justified in terms of market fundamentals,'' the Saudi government said today in a statement distributed by the Saudi Press Agency. Oil climbed $10.75 on June 6, its biggest gain ever, because of a weakening dollar and threats of supply disruptions.
``We are seeing increasing dialogue between producers and consumers, which is positive,'' said Eric Wittenauer, an analyst at Wachovia Securities in St. Louis. ``Thus far we've heard a lot but there's not been much action. I think a lot of what we're seeing today is just a reaction to the exaggerated gain on Friday as the dollar rebounds.''
Crude oil for July delivery fell $4.19, or 3 percent, to $134.35 a barrel at the 2:30 p.m. close of floor trading on the New York Mercantile Exchange. Futures, which reached a record $139.12 a barrel on June 6, are more than double the level of a year ago.
Brent crude oil for July settlement fell $3.90, or 2.8 percent, to $133.79 a barrel on London's ICE Futures Europe exchange. Prices climbed to a record $138.12 on June 6.
Saudi Arabia said it had increased production this month and has told all the oil companies it deals with that it's ready to provide them with additional supplies if needed.
Crude oil also fell as the dollar climbed against the euro for the first time in three days as U.S. stock indexes advanced. The falling dollar has spurred investors to purchase commodities as a hedge against the U.S. currency's decline. The dollar's drop has helped lead oil, gold and corn to records this year.
The next scheduled meeting of the Organization of Petroleum Exporting Countries will be in September. The 13-member group has kept output targets unchanged at its past three meetings. OPEC is responsible for more than 40 percent of global oil output.
Pump prices in the U.S. passed $4 a gallon for the first time over the weekend. Regular gasoline, averaged nationwide, rose 1.8 cents to a record $4.023 a gallon, AAA, the nation's largest motorist organization, said today on its Web site.
China's economy has grown at least 10 percent in each of the past five years, making cars affordable to more people and spurring sales. Chinese vehicle sales have about quadrupled over the past eight years to 8.79 million last year, making the country the world's second-biggest automobile market.
China caps fuel prices to limit inflation, which reached the fastest pace in 11 years in February. China may spend about $45 billion subsidizing oil refiners for selling fuels at below- market prices, the International Energy Agency said on May 13.