Price of crude oil slipped for the second day in New York on the back of a statement by United Nations secretary general Ban Ki-moon that Saudi King Abdullah would do everything possible to tame abnormally high price of crude.

 In remarks carried by the Saudi Press Agency (SPA), the UN secretary general said King Abdullah "sees that oil prices are currently abnormally high and he is willing to do all that is possible to bring prices to their appropriate levels." The SPA quoted Ban after his meeting with the Saudi monarch in Jeddah on Sunday. These remarks assume significance as Saudi Arabia is the world's top oil exporter.

According to an OPEC official, Saudi Arabia,  may announce an increase in output at a meeting it is hosting in Jeddah on 22 June. An agency report, once again quoting the UN secretary general, said that the Middle East kingdom may pump an extra 200,000 barrels a day from next month. The increased output would boost supply by 0.2 per cent.

If the Saudi's do raise prices as they are suggesting then it would mark a rise of 550,000 bpd, or over 6 per cent since May, and would also take Saudi crude output to its highest monthly rate since August 1981.

Crude oil for July delivery fell as much as $1.40, or 1 per cent, to $133.46 a barrel in electronic trading on the New York Mercantile Exchange. The contract settled at $134.86 a barrel on 13 June, marking a fall of 2.7 per cent for the week.

Brent crude for August settlement declined $1.09 to $134.02 a barrel on London's ICE Futures Europe exchange.

Oil in New York reached a record $139.12 on 6 June.

Oil prices have been slipping over the week on the back of strong comments from Saudi officials that  current prices are ``unjustified'' and that the upcoming Jeddah meeting of producers and major industrial nations should take action to help stabilize prices.

OPEC, producer of 40 per cent of the world's oil, has cut its forecast for world demand a fifth time, reflecting slower global growth. An OPEC statement on 13 June said that world demand for the commodity will rise 1.1 million barrels, to 86.88 million barrels a day, this year. This reflects a fall of about 60,000 barrels a day from the consortium's previous monthly estimate.

Prices have also slipped with the dollar posting its biggest gain against the euro since 2005. This reduces the appeal of commodities as an investment hedge against inflation.

Saudi Arabia is planning to start up its Khursaniyah field sometime over the next month, according to  an Aramco official. Output from the field is expected to peak at 500,000 barrels a day.