The Middle East Economic Survey (MEES) reported yesterday that Saudi Arabia, the world’s biggest oil exporter, was considering a sizeable increase in output to near record levels of around 10 million barrels per day ahead of a meeting of producers and consumers in Jeddah on June 22.

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.

US crude oil was down $2.36 down at $134.38 a barrel by 1515 GMT.

Brent crude, whose July contract expires this week, was down $2.31 at $133.78 a barrel.

Growth forecast cut

The Organisation of Petroleum Exporting Countries (Opec) yesterday became the latest group to cut its forecast for global growth in oil demand in 2008 for the third time this year, adding also 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.

Meanwhile, gold weakened a touch yesterday as the dollar remained firm against the euro and oil prices dropped by $3 a barrel. Gold dipped to $864.30/$864.95 an ounce at 1506 GMT, from $867.55/$869.55 late in New York on Thursday.

Gold prices have suffered as the dollar heads for its strongest week in three years on the back of rising speculation of a rate hike, shedding just over four per cent since Monday.

“With the stronger US dollar environment, gold has been under a lot of pressure,” said Dan Smith, an analyst at Standard Chartered.