Oil rebounded above $134 a barrel today after falling sharply in response to plans by Saudi Arabia to push output to its highest rate in decades.
US light, sweet crude for July delivery was up 4 cents at $134.90 a barrel by 10am, after falling as much as $1.40 a barrel, or about 1 per cent, earlier in the session.
London Brent crude was down 28 cents at $134.83.
United Nations chief Ban Ki-moon said over the weekend that Saudi Arabia, the world's biggest oil exporter, was set to increase output to 9.7 million barrels per day in July, its second supply boost in as many months.
That would be a rise of 550,000 bpd or over 6 per cent since May and would take Saudi output to its highest monthly rate since August 1981, according to US government data.
Saudi plans emerged ahead of a meeting of oil producers and consumers on June 22nd to find a solution to record oil prices that have caused consumer protests in Asia and Europe.
Some analysts view Saudi output increase as a signal that other members of the Organization of the Petroleum Exporting Countries might follow.
"I think OPEC will add more barrels next week and it will have to be significant enough for the world to stand up and take notice," said Rob Laughlin, analyst at futures broker MF Global.
Saudi Arabia's invitation to producers and consumers to meet in Jeddah this weekend is in response to the growing protests from consumers over record oil prices that could threaten the health of the global economy.
Oil has doubled in the last year and risen 40 per cent since the start of this year, boosted by expectations that supply will struggle to meet demand from newly industrialising countries such as China and India.