Oil rises on modest Saudi increase, Nigeria

NEW YORK — Oil prices rose Monday on disappointment over Saudi Arabia's modest production increase and concerns that output from Nigeria will decline. Retail gas prices, meanwhile, inched lower overnight, but appear unlikely to change much as long as oil prices stay in a trading range.

Saudi Arabia said Sunday at a meeting of oil producing and consuming nations that it would turn out more crude oil this year if the market needs it. The kingdom said it would add 200,000 barrels per day in July to a 300,000 barrel per day production increase it first announced in May, raising total daily output to 9.7 million barrels.

But that pledge at the meeting held in the Saudi city of Jeddah fell far short of U.S. hopes for a larger increase. The United States and other nations argue that oil production has not kept up with increasing demand, especially from China, India and the Middle East. Saudi Arabia and other OPEC countries say there is no shortage of oil and instead blame financial speculation and the falling U.S. dollar.

"The Jeddah meeting became a non-event," said Linda Rafield, senior oil analyst at Platts, the energy research arm of McGraw-Hill Cos. "There was no surprise."

Light, sweet crude for August delivery rose $1.38 to settle at $136.74 a barrel on the New York Mercantile Exchange.

Saudi Arabia did say it would work to boost its long-term production capacity.

"Obviously, the Saudis are concerned, and that could be a bearish factor," said Andrew Lebow, senior vice president at MF Global LLC in New York.

But any longer-term production increases are years away, Rafield said.

"The oil summit really has not done much to temper oil pricing," said Victor Shum, an energy analyst with Purvin & Gertz in Singapore. "It was a modest output increase and hardly really compensates for the disruption out of Nigeria."

Concerns about Nigerian production also boosted prices Monday. Royal Dutch Shell PLC said it cannot meet contractual obligations to export oil from a Nigerian oil field following a militant attack Thursday, and news reports say Chevron Corp. has been forced to shut down a Nigerian oil facility following a militant attack. News reports of a strike against Chevron by Nigerian workers also contributed to buying Monday.