Oil eases near $134, awaits more Saudi crude

By Jane Merriman

LONDON (Reuters) - Oil eased to stand near $134 on Tuesday after touching a record high near $140 the previous day, with the market looking ahead to a meeting of oil producers and consumers in Jeddah at the weekend.

U.S. crude was down 55 cents at $132.06 a barrel by 9:55 a.m. EDT, off lows of $132 on a weakening U.S. dollar. It ended 25 cents lower on Monday, as traders quickly took profit from a rally to a record $139.89.

London Brent crude was down 86 cents to $133.85 a barrel.

Prices see-sawed in a $7 range on Monday, supported by the weak U.S. dollar and pressured by Saudi Arabia's plans to raise output.

"The market is starting to realize the importance of Saudi Arabia increasing production in the latter part of the summer," said Thomas Stenvoll, energy strategist at Swiss bank UBS.

Top exporter Saudi Arabia appears poised to ramp up production for a second month in July.

Initially analysts and market sources said it might struggle to find willing buyers.

"They can increase production, they can turn on the tap, but can they get enough traders to take it?" said Greg Smith, who manages $500 million in futures as the head of the Global Commodities fund in Australia.