Crude Falls to $134.86 As Supply Hopes Rise

Crude-oil futures dropped Friday on a report that Saudi Arabia, the world's largest petroleum exporter, is considering another increase in its oil output. Phil Flynn, a vice president at Alaron Trading Corp., said he was skeptical that a 550,000-barrel-a-day production increase from Saudi Arabia would damp prices. To make any kind of impact on oil prices, the country would have to boost output by one million to three million barrels a day, closer to its full capacity, he added. "If they really want to calm the market, they should open up the taps and really flood the market, if only to show they're still the big dog in town," Mr. Flynn said. Separately, the Organization of Petroleum Exporting Countries cut its forecast for world oil-demand growth this year, saying high oil prices are beginning to affect consumption in industrialized economies beyond the U.S. However, demand in emerging economies will offset that slowing consumption, it said, with overall global economic growth forecast to be unchanged.