* Brent seen down at $105 in "coming months" - Goldman
* IEA says high prices slowing growth in oil demand
* Coming up: API oil inventory data, 4:30 p.m. EDT Tuesday
(Recasts, updates prices, adds detail throughout)
By Robert Gibbons
NEW YORK, April 12 (Reuters) - Crude fell sharply on
Tuesday as Goldman Sachs warned again of a price reversal,
while the International Energy Agency and OPEC said expensive
oil could erode demand.
Oil extended its retreat from 32-month peaks reached on
Monday and U.S. crude looked set to post the biggest two-day
percentage loss since May 2010, when the Greek and wider euro
zone debt crises pressured commodities.
Saudi Arabia, pointing to lackluster demand, reversed a
recent output hike that had been expected to make up for
production shut down by Libya's conflict, also weighing on
crude prices.
OPEC kept its 2011 oil demand forecast steady, but said the
group saw a risk that higher oil prices could dent demand for
transport fuel. []
A slightly higher demand growth forecast for 2011 came from
the U.S. Energy Information Administration, although the agency
lowered its forecast of 2012 demand growth. []
Brent crude for May <LCOc1> fell $3.10 to $120.88 a barrel
by 12:47 p.m. EDT (1647 GMT).
U.S. crude <CLc1> lost $3.85 to $106.07.
Investors that bought into the oil market in the past few
months could now be making a move to exit, according to Brendan
Brown, head of economic research at Mitsubishi UFJ Securities.
"I think we are going to see some sort of a rotation, with
some investors deciding to get out and take some profit," Brown
told Reuters.
That seemed to be Goldman Sachs' <GS.N> message for the
second straight day.
Goldman expects Brent to fall toward $105 in coming months,
it said in a note emailed to clients on Tuesday. A day earlier,
the bank recommended closing its 'CCCP Basket' trade, which
includes a 40 percent weighting in U.S. crude futures.
[] []
The Reuters-Jefferies CRB commodities index <.CRB> posted
its sharpest one-day decline in a month. []
DEMAND CONCERNS
Sources told Reuters that Saudi Arabia, holder of the most
spare production capacity in the Organization of the Petroleum
Exporting Countries, had trimmed production by around 500,000
barrels per day to around 8.5 million bpd due to slow demand.
[]
Saudi Arabia's production cut comes amid increasing
concerns about lofty oil prices.
High prices are beginning to dent growth in oil demand,
Western consuming nations' energy policy adviser the IEA said
on Tuesday. []
The IEA said few expect OPEC to agree formally to raise
output and that could mean prices will correct and fall back
because of a global economic slowdown. []
"Fear of demand destruction is killing this market. There
is a feeling that the recent rally lifted oil prices to
unsustainable levels," said Phil Flynn, analyst at PFGBest
Research in Chicago.
Japanese demand remains in question as economic damage from
last month's earthquake and tsunami is likely to be worse than
first thought, the country's economics minister warned.
[]
SUPPLY THREATS
Uncertainty remained over Libya's conflict and the Middle
East, where protests and opposition to current regimes
continued.
France and Britain urged NATO to do more to stop Muammar
Gaddafi's forces from bombarding civilians as clashes continued
in Libya. []
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Libya graphics http://link.reuters.com/neg68r
Interactive graphic http://link.reuters.com/puk87r
Reuters Insider-Doomsday Scenarios for Oil:
http://link.reuters.com/ner88r
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Weekly oil inventory reports will offer a fresh snapshot of
U.S. demand and stockpiles. Analysts surveyed on Monday
expected crude stocks to have risen last week, with distillate
stocks dipping and gasoline stocks dropping. []
Oil data from industry group the American Petroleum
Institute is due at 4:30 p.m. EDT (2030 GMT) on Tuesday.
(Additional reporting by Gene Ramos in New York, Ikuko
Kurahone, Dmitry Zhdannikov and Zaida Espana in London and
Chikako Mogi and Risa Maeda in Tokyo; Editing by Dale Hudson)
