* U.S. crude falls to $111.12; Brent drops to $122.78
* Saudi Aramco says not comfortable with current oil prices
* Investors reduce risk ahead of Fed meeting -analyst
* Coming up: U.S. consumer confidence for April; 1400 GMT
(Adds technical outlook, updates prices)
By Manash Goswami and Florence Tan
SINGAPORE, April 26 (Reuters) - U.S. crude futures fell more
than $1 on Tuesday as investors reduced risk ahead of a meeting
of the U.S. Federal Reserve and Saudi Aramco's chief executive
said Saudi Arabia was not comfortable with current oil prices.
NYMEX crude for June delivery <CLc1> declined as much as
$1.16 a barrel to $111.12, and traded at $111.54 a barrel by
0650 GMT. Brent <LCOc1> dropped 31 cents to $123.35 a barrel,
after slipping to as low as $122.78.
"We are not comfortable with oil prices where they are
today...I am concerned about the impact it could have on the
global economy," Khalid al-Falih, Aramco's chief executive, told
an industry gathering in Seoul.
Crude snapped three days of gains, sliding along with silver
and gold, as investors became uncertain whether the U.S. Federal
Reserve would signal a change in its easy monetary policy stance
after a two-day meeting of policymakers wraps up on Wednesday.
"There is some risk reduction because the market wants to
watch if Bernanke will say anything about a change of stance,"
Tetsu Emori, a Tokyo-based commodities fund manager at Astmax
Investments, said. "Any change of stance is highly unlikely."
Participants will look to the post-meeting news conference
by Fed Chairman Ben Bernanke on Wednesday -- the first regularly
scheduled news briefing by a Fed chief in the U.S. central
bank's 97-year history -- to see how the Fed plans to exit from
its ultra-loose policy.
"The market is displaying a cautious stance as any signs of
the Fed tightening dollar supply would reduce crude gains," said
Serene Lim, an analyst at ANZ.
Saudi Arabia had enough capacity to meet any spike in demand
and plug short-term outages in supply and there was no tightness
in global oil markets, Falih said. His comments echoed Saudi Oil
Minister Ali al-Naimi who said last week that the kingdom had
cut oil output in March as the market was oversupplied.
[]
Unrest and violence in North Africa and the Middle East and
strong demand growth in Asia have pushed prices to their highest
since 2008, triggering a series of warnings from consumers and
producers that costly oil would harm economic growth, in turn
eroding fuel demand.
"They should be happy with the increases, but what Saudi
Arabia is looking for is stability in prices," Emori said.
"Anything outside of a range of $90-$110 makes them
uncomfortable."
STOCKPILES, DOLLAR
The slide in NYMEX futures may have been steeper than Brent
partly because of expectations that U.S. crude oil stockpiles
were likely to have risen last week, with crude imports heftier
than demand from refineries, a preliminary Reuters poll ahead of
weekly inventory reports showed on Monday.
The increase follows an unexpected drawdown the week before
which was the first decline in domestic crude stocks in seven
weeks. The American Petroleum Institute will issue its data
later in the day followed by the Energy Information
Administration on Wednesday.
The strengthening of the U.S. dollar against the euro also
weighed on oil. The euro slipped after European Central Bank
Governor Jean-Claude Trichet said he shared the view that a
strong dollar was in the interest of United States.
Still, U.S. oil futures have a strong support at $110 a
barrel below which they are unlikely to dip, Emori said. Prices
may start to recover after the Fed meet ends as the central bank
is expected to stick with its current policy, which will provide
"a very good trigger," Emori said.
U.S. oil is biased to fall to $109.98 per barrel based on
its wave pattern and a bullish target at $114.90 has been
aborted, according to Reuters market analyst Wang Tao. Brent may
fall to $121.54 per barrel, he said.
MIDDLE EAST
Oil has strengthened in the past few months as protests in
Libya spread to other countries in the Middle East and North
Africa such as Syria and Yemen, boosting fears of further supply
disruptions from the region at a time when demand from key
consumers such as China and India continues to rise.
Security forces have arrested about 500 pro-democracy
sympathisers across Syria after the government sent tanks to try
to crush protests in the city of Deraa, the Syrian rights
organisation Sawasiah said on Tuesday. []
Italy, which has been playing a limited role in NATO
operations in Libya, decided on Monday its air force would be
allowed to bomb selected military targets in the former Italian
colony. []
(Editing by Clarence Fernandez)
