Opec output boost cools oil price

OIL prices were on the skids today as traders took profits on speculation that supply may not be so tight in coming months.

The world's largest oil exporters are planning to step up production in an attempt to dampen spiralling prices, according to reports.

Saudi Arabia appears to have persuaded even the most reluctant members of the Organisation of Petroleum Exporting Countries (Opec) to agree to lift the cartel's output quota by 6%, or 1.5m barrels a day, when they meet in Amsterdam on Saturday.

But some, including Venezuela and Iran, do not want to give the impression they are caving in to pressure to lower prices. They are expected to argue the final decision should not be taken before Opec's next formal meeting, in Beirut on 3 June.

US crude fell 45 cents to $40.09 a barrel, extending yesterday's losses which saw it dive more than a dollar after hitting a record $41.85 on Monday. In London, Brent crude fell 35 cents to $36.60.

'There's a lot of bullish news factored into the price and the market is vulnerable to any moderation in demand and/or pick-up in supply,' said David Thurtell, commodities strategist at Commonwealth Bank of Australia.

Analysts expect data due today to show a rise in US gasoline stocks ahead of the key summer driving season.

Meanwhile, the FTSE 100 share index opened 35 points higher today at 4449.4, after a robust performance by the Dow last night.