* Global investors watch Fed policy meeting
* Saudi concerned over economic impact from high price
* Coming up: API oil inventory data, 4:30 p.m. EDT Tuesday
(Recasts, updates prices and market activity)
By Robert Gibbons
NEW YORK, April 26 (Reuters) - Oil prices seesawed in
volatile trading on Tuesday, as investors eyed a U.S. Federal
Reserve two-day policy meeting for any signal of a change in
monetary policy.
The U.S. dollar remained under pressure on expectations
that the Fed will keep monetary policy accommodative, helping
support dollar-denominated oil prices that have benefited by
attracting investment as a hedge against inflation.
Comments by the chief of Saudi Arabia's state-run firm
Aramco voicing concern about the impact of high oil prices on
the global economy weighed on crude early Tuesday, but the weak
dollar helped oil recover. []
The Saudi view contrasted with U.S. Treasury Secretary
Timothy Geithner's remarks that oil, "at current levels, on its
own, it won't put the recovery at risk." []
A power outage that affected operations at several refiners
in the Texas City, Texas, region near Houston lifted U.S.
gasoline <RBc1> and heating oil <HOc1> futures and helped keep
crude futures supported. []
Brent crude for June <LCOc1> edged up 5 cents to $123.71 a
barrel by 1:07 p.m. (1707 GMT), having reached $124.40.
U.S. crude <CLc1> for June fell 52 cents to to $111.76.
While Tuesday's intraday peak was $112.64, U.S. crude
reached $113.48 on Monday, highest intraday price since
September 2008, before ending the day down 1 penny.
Libya's civil war and violence-tinged unrest Syria and
Yemen helped limit any oil price decline, keeping the potential
for supply disruption in the region highlighted.
[] [] []
Tensions between Bahrain and Tehran escalated as Bahrain
ordered the expulsion of an Iranian diplomat for alleged links
to a spy ring in Kuwait. []
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For a 24-hour technical outlook on oil:
http://graphics.thomsonreuters.com/WT1/20112604135349.jpg
For a 24-hour technical outlook on Brent:
http://graphics.thomsonreuters.com/WT1/20112604140303.jpg
For stories on Libya & Middle East crisis: []
For a TAKE-A-LOOK on Middle East, N Africa:[]
For top stories on the global economy: []
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Analysts and brokers said investors would be cautious
awaiting the result of the Fed's Federal Open Market Committee
meeting that started on Tuesday and will include a news
conference on Wednesday.
"This week, it will be all about the Fed meeting. Volume
and volatility will come back after the meeting," said Olivier
Jakob of Petromatrix in Switzerland.
U.S. crude and Brent trading volumes were on pace to post
higher totals than on Monday, but also remained on pace to
continue to lag 30- and 250-day averages, according to Reuters
data.
DOLLAR UNDER PRESSURE
The euro jumped to a 16-month high against the dollar, with
no respite in sight for the greenback as long as the U.S.
Federal Reserve continues to lag other major central banks in
raising interest rates. []
The dollar index <.DXY>, measuring the greenback against a
basket of currencies, weakened.
"Exchange rates and lack of confidence in the currency have
been supportive to oil. The market is going to be cautious and
wait to see if the Fed and (Chairman) Bernanke address rising
energy prices and inflation," said Phil Flynn, analyst at
PFGBest Research in Chicago.
U.S. OIL INVENTORIES
Oil investors also awaited weekly oil inventory reports
expected to show crude stocks rose last week. A Reuters poll on
Monday expected gasoline stocks to be lower, posting what would
be a 10th consecutive weekly decline. []
The forecast was for distillates to be up slightly, with
refinery capacity utilization also rising.
Industry group the American Petroleum Institute (API) will
issue its weekly inventory data at 4:30 p.m. EDT (2030 GMT) on
Tuesday, with the government's report issued by the U.S. Energy
Information Administration following on Wednesday at 10:30 a.m.
EDT (1430 GMT).
(Additional reporting by Ikuko Kurahone in London and Manash
Goswami and Florence Tan in Singapore; Editing by David
Gregorio)
