China, the second-biggest fuel consumer after the U.S., will increase gasoline and diesel prices by 1,000 yuan ($145.50) a ton, the National Development and Reform Commission said. The increases represent a 17 percent gain for gasoline and 18 percent for diesel. Gasoline, natural gas and heating oil also fell.
Crude oil for July delivery fell $4.75, or 3.5 percent, to settle at $131.93 a barrel at 2:50 p.m. on the New York Mercantile Exchange, the biggest drop since March 31. Futures climbed to a record $139.89 on June 16. Prices are 91 percent higher than a year ago.
Brent crude oil for August settlement declined $4.44, or 3.3 percent, to settle at $132 a barrel on London's ICE Futures Europe exchange. Prices climbed to a record $139.32 on June 16.
Oil rallied for the first time in four days yesterday as President George W. Bush said he doesn't expect pledges of higher supplies to emerge from a June 22 meeting of producers and consumers in Jeddah, Saudi Arabia.
Saudi Arabia plans to increase crude-oil production by 200,000 barrels a day, according to a statement from the kingdom's embassy in London.
The statement didn't specify the timing of the increase. Oil Minister Ali Al-Naimi pledged on May 16 to boost output by 300,000 barrels a day in June. The country has since indicated it plans to announce a further addition at the Jeddah meeting.
China will raise jet-fuel prices by 1,500 yuan a ton, or 25 percent, tomorrow, the top policy planner said. On July 1, China will increase electricity prices by an average 0.025 yuan a kilowatt-hour, or 4.7 percent. China will impose temporary caps on thermo-coal prices until the end of this year.