Oil Dips After...

<?xml version="1.0" encoding="UTF-8"?><root available-locales="en_US," default-locale="en_US"><static-content language-id="en_US"><![CDATA[Oil fell by more than $1 on Monday as traders booked profits from crude's biggest one-day jump, but OPEC's resistance to pumping more oil kept prices near their latest record high. U.S. light, sweet crude for July delivery fell $1.12 to $137.42 by 0703 GMT, softening as the dollar rebounded and the threat of economic damage from high costs mounted. But traders gave up little of the unprecedented $10.75 surge on Friday, when oil hit a record $139.12 amid frenetic buying triggered by the slumping dollar and comments by an Israeli minister about a possible attack on Iran, the world's fourth-largest oil producer. A forecast by investment bank Morgan Stanley that oil prices could top $150 a barrel by the July 4 U.S. holiday added to Friday's speculative fever, taking two-day gains to more than $16 a barrel and reversing two weeks of losses. Related Stories Slipping into crisis Oil Currency Hypocrisy Global Protest Oil Muddle: Full Coverage Goldman Sachs' global head of commodities research Jeffrey Currie echoed that call on Monday, telling a conference that &quot;demand for oil is weak, but supplies are even weaker&quot;. Oil's six-year-long rally has gathered pace this year, with prices rising about 40 percent since January as funds hedge against the dollar and some bet that long-term oil supplies will struggle to keep up with demand in the decades ahead. &quot;What's driving this ultimately is compound consumption. You can't put 40 million cars a year on the road and think we're going to consume less,&quot; said Greg Smith, who manages $500 million in futures as the head of fund Global Commodities in Australia. Oil's direction has also become increasingly intertwined with the dollar, which edged up against the yen on Monday. The greenback slumped on Friday after data showed the U.S. economy lost jobs for the fifth straight month and the unemployment rate shot up to its highest in more than three years. At the weekend, key OPEC officials maintained they saw no need to consider pumping more oil now, despite the price surge and Australian Prime Minister Kevin Rudd's call for G8 nations to &quot;apply the blow-torch&quot; to force producers to step output. &quot;I think there is enough oil in the market, I did not hear anybody calling for a meeting,&quot; Shokri Ghanem, head of Libya's National Oil Corporation and the country's top oil official, told Reuters in an interview. OPEC, supplier of more than a third of the world's oil, is next scheduled to meet on Sept. 9 to discuss oil policy. Saudi Oil Minister Ali al-Naimi and his Pakistani counterpart agreed on Sunday that oil's surge was not linked to fundamentals, the Saudi Press Agency reported. G8 REFRAINS While consumer nations have often urged the cartel to tame prices by pumping more crude, Group of Eight energy ministers meeting in Japan at the weekend focused on domestic efficiency and technology as the long-term solution to record oil. OPEC ministers have repeatedly blamed speculation and other factors for the surge in prices. BP CEO Tony Hayward said the extreme volatility in prices was because &quot;supply is not responding adequately to rising demand&quot;. Further support last Friday came from remarks by Israel's transport minister that an attack on Iran's nuclear sites looked &quot;unavoidable&quot;, the most explicit threat yet against Tehran from Prime Minister Ehud Olmert's government. Oil's latest boom has heightened the risk to economic growth in major consumer countries including the United States, whose economy already is hobbled by a housing crisis. Some analysts say the market may be overlooking the subtle erosion in oil demand, which may become more visible later this year, as higher prices start to bite in Asia. &quot;Until Q4, there certainly appears to be additional spike risk in an impatient market. But when the data becomes available, the price action could be as sharp on the way down as on the way up,&quot; Lehman Brothers analysts said in a report. In the world's biggest consumer, whose gasoline use alone accounts for over a tenth of the world's oil demand, the average retail gasoline price topped $4 a gallon for the first time, a survey by the AAA travel group showed on Sunday. Some warned of worse to come. &quot;I think it will go higher,&quot; said Ghanem, who is also head of Libya's OPEC delegation. &quot;Easy, cheap oil is over, peak oil is looming.&quot; (Reuters)