Oil falls $1 after OPEC statement

By Margaret Orgill

LONDON (Reuters) - Oil dropped over $1 on Thursday after a statement from OPEC said supply was sufficient and a shipping source said Saudi Arabia planned to raise spot market oil exports to the United States this month.

Secretary-General Abdullah al-Badr said the Organization of the Petroleum Exporting Countries believed the world had enough crude supply at the moment but could pump more if needed to keep pace with demand.

U.S. crude for June was down $1.45 cents at $122.08 a barrel by 11:52 a.m. EDT in choppy trade, off a record of $123.93 reached late on Wednesday.

London Brent crude was down 84 cents at $121.48 a barrel.

Oil prices have risen by about $13 since late last week in a rally driven partly by a report from Goldman Sachs predicting that oil prices could reach $200 in the next two years.

"The Goldman Sachs report of $200 oil spooked the market a little but the prompt reality is not showing any crisis in oil supply and demand," said Olivier Jakob of analysts Petromatrix.

Jakob pointed to a rise in U.S. crude and gasoline stocks last week as evidence of sufficient supply.

Top oil exporter Saudi Arabia has booked eight supertankers to carry 16 million barrels of crude to the United States in May and early June, the highest number of cargoes so far this year, a shipping source said.

The rise to the latest record high was driven by worries of tight world diesel supply following a drop in distillate inventories in the United States last week.

Gas oil futures, the benchmark for European heating and diesel contracts, hit a new high on Thursday of $1,161.25 a tonne on worries of a diesel shortage.

The diesel shortage has been caused by extensive refinery maintenance, a recent strike at the UK's Grangemouth refinery and production problems at the Porvoo refinery diesel unit in Finland, a leading supplier to the European market.

May gas oil futures usually trade at a discount of about $2 to June at this time of year as European heating oil demand wanes due to the warmer weather.

Tight power supplies in China, South Africa, Chile, Argentina and parts of the Middle East have set off a worldwide boom in demand for diesel for use in electric generators, adding to robust demand for use in Europe's passenger vehicle fleet.

Also weighing on oil, the dollar was up 0.1 percent against a basket of six major currencies, having hit a two-month high earlier. The dollar slipped to a record low against the euro last month, boosting dollar-denominated commodity prices, but has since recovered by more than 4 percent against the European currency.

(Additional reporting by James Topham in Tokyo; editing by James Jukwey)

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