Updated from 11:39 a.m. EDTOil prices fell Monday as traders anticipated a production boost by the Organization of Petroleum Exporting Countries scheduled for Aug. 1, with market watchers speculating that some members of the oil cartel already were taking advantage of the change. The benchmark U.S. crude lost 27 cents, or 0.6%, closing at $41.35 a barrel in regular floor trading on the New York Mercantile Exchange, less than $1 below its record high set in June. Gasoline prices ended about 3 cents lower at $1.246 a gallon. Traders have been focused on short-term supply issues in recent months as attacks on Iraq's oil infrastructure, strikes in Nigeria and Norway, a tax dispute between Russia's largest oil company and the government, and periodic terror attacks on oil workers in Saudi Arabia have caused routine price spikes. Unusually strong global demand -- partly because of the roaring Chinese economy -- also has contributed to market worries about supply. OPEC two weeks ago said it had decided on an increase to its daily production ceiling by a half-million barrels a day in August and also canceled a July 21 meeting on the issue. The measure was part of a broader agreement reached at OPEC's June 3 meeting, when it decided to increase official production by 2 million barrels a day in July. Prices touched a record high of $42.33 a barrel right before that meeting. The August increase will put OPEC's official production ceiling at 26 million barrels a day, although its members routinely produce more than their individual quotas. A recent International Energy Agency report said the cartel produced more than 28 million barrels a day in June, when its ceiling was just 23.5 million barrels. At one point recently, oil prices had fallen 15% from their record high, closing below $36 a barrel in June. Since then, prices have bounced back, partly because of worries about a terror attack on the U.S. in the run-up to the November presidential election.
In May, traders relentlessly bid up prices on short-term supply concerns triggered by strong global ahead of the peak summer driving season in the U.S. and Europe.