NS: Oil falls on Saudi pressure to keep prices down
Brent crude oil futures fell to a six-week low on Wednesday, as the market digested comments from the world's largest oil exporter Saudi Arabia that it would take action to keep prices in check, raising expectations of increased supply.
On Tuesday an OPEC Gulf source said Saudi Arabia was pumping around 10 million barrels per day (bpd) and working to keep oil prices down.
"People are thinking that maybe the Saudis are going to produce more, and some funds are taking the opportunity to liquidate positions," said Christopher Bellew at Jefferies Bache.
Market participants said earlier worries about the perilous state of Spain's finances had snuffed out gains made by oil prices after Japan's central bank became the latest to further open its monetary taps.
Brent November crude fell $1.38 cents to $110.65 a barrel by 9:00 a.m. EDT (1300 GMT). It touched its lowest since August 7 and is down 5 percent this week, its biggest such fall since late June.
U.S. October crude was down 68 cents at $94.61 a barrel. The contract expires on Thursday. U.S. November crude fell 74 cents to $94.88 a barrel.
Japan followed the U.S. Federal Reserve and said it would boost asset purchases in the face of a slowing global economy, spurring hopes other central banks would follow suit.
Some analysts, however, think that quantitative easing will have little positive impact on oil prices.
"The US fiscal cliff still hangs above the market. Up till now, the negative impact of this fiscal cliff is not priced in by the market and could still have a serious negative effect on oil prices," ABN Amro said in a note to clients.
Brent has gained more than 25 percent since hitting a 2012 low of $88.49 in June as investors have worried about the security of supply from the Middle East and North Africa and on expectations for commodity prices to rise on economic stimulus moves by the United States, Europe and China.
POLITICAL RISKS
Emphasizing political risks that are underpinning oil prices, France said it would temporarily close its embassies and schools in 20 countries on Friday after a French magazine published cartoons of the Prophet Mohammad.
Attention will turn at 1430 GMT to the Energy Information Administration data showing inventory levels in the United States, to give an indication on the demand/supply dynamics.
Crude and distillate stocks were expected to be up 1.0 million barrels, with gasoline inventories up 1.2 million barrels, a Reuters survey of analysts taken ahead of weekly reports showed.
After Japan, investor focus turns to China, the world's second-largest oil consumer, with a preliminary reading of its manufacturing activity for September set for publication on Thursday, along with similar data from the United States and Europe.
