Oil dips after record near $140

By Richard Valdmanis

NEW YORK (Reuters) - Oil prices eased on Monday as top world producer Saudi Arabia appeared poised to boost production to the highest level in decades to ease a record rally that has threatened global economic growth.

The dip into negative territory came after a brief surge earlier in the session to a record high near $140 a barrel, triggered by weakness in the U.S. dollar and an emergency shutdown of a North Sea oil platform.

"After today's rally to near $140, people are reassessing the situation, noting that we may be getting more barrels from OPEC and mindful that the Saudis are hosting a summit of producers and consumers this weekend," said Andy Lebow, oil analyst at MF Global in New York.

U.S. light, sweet crude for July delivery settled down 25 cents at $134.61 a barrel, off a record high of $139.89 set earlier in the session. London Brent crude fell 40 cents to

$134.71.

Oil prices have surged about 40 percent in wildly volatile trade since the start of the year and are up nearly seven-fold since 2002, propelled by rising demand in China and other developing nations.

United Nations chief Ban Ki-moon said over the weekend that Saudi Arabia, under pressure from consumer nations calling for more supplies, was set to increase its oil output to 9.7 million barrels per day in July.

That would be a rise of 550,000 bpd, or over 6 percent, since May, and would take Saudi output to its highest monthly rate since August 1981, according to U.S. government data.