Crude falls more than $1


US crude futures fell more than $1 on Tuesday as investors reduced risk ahead of a meeting of the US Federal Reserve and after Saudi Aramco’s chief executive said the kingdom was not comfortable with current oil prices.

NYMEX crude for June delivery declined as much as $1,08 a barrel to $111,20 and traded at $111,28 a barrel by 0242GMT. Brent dropped 66c to $123 a barrel.

“We are not comfortable with oil prices where they are today. . . I am concerned about the impact it could have on the global economy,” Aramco’s chief executive, Khalid al-Falih, told an industry gathering in Seoul.

Crude snapped three days of gains, sliding along with silver and gold, as investors were uncertain whether the US Federal Reserve would signal a change in its easy monetary policy after a two-day meeting of policymakers wraps up today.

“There is some risk reduction because the market wants to watch if (Ben) 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.”

Market participants will look to the post-meeting news conference by Fed Chairman Ben Bernanke on today, the first regularly scheduled news briefing by a Fed chief in the US 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. “There isn’t a lot of fresh development in the Middle East and Libya which is providing a floor to prices.”

Saudi Arabia has enough spare crude capacity to meet demand as oil prices extend a gain above $120 per barrel, Al-Falih said, adding that he didn’t see any tightness in global oil supply.

“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.”

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.