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UPDATE 12-Oil falls on more Saudi crude, strong dollar

Published 06/10/2011, 04:36 PM
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* Saudi Arabia offers more oil to Asian customers-sources

* Dollar strength, weak equities add pressure on oil

* Brent premium to U.S. crude hits record above $19

* Coming up: API oil stocks data, 4:30 p.m. EDT Tuesday (Recasts, updates prices and market activity to settlement)

By Robert Gibbons

NEW YORK, June 10 (Reuters) - Oil prices fell on Friday on news Saudi Arabia was offering more oil to Asian customers, with additional pressure from a stronger dollar and weak equities.

Brent's premium to U.S. crude hit a record high for a second time this week, moving above $19 a barrel, supported by sweet crude production shut in by Libya's conflict and disrupted North Sea production. [ID:nN10184305]

The dollar index strengthened <.DXY> as the euro fell across the board, and uncertainty about Greece's debt problems and a slowing U.S. economy boosted risk-averse sentiment and pressured dollar-denominated oil prices. [USD/]

U.S. stocks fell as China's weak trade data and the Greek debt problems reinforced concerns about slowing economies. The Dow and S&P 500 posted their sixth consecutive weekly loss for the first time since mid-2008. [.N] <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ Graphic-WTI/Brent spread http://link.reuters.com/buv99r COLUMN-Saudi Arabia and the Cartel of One [ID:nLDE7591NY] ANALYSIS-Saudi supply rise cheapens OPECcrude [ID:nL3E7HA18N] Is the global economy slowing? http://r.reuters.com/pad89r More on Libya: [nLDE72H00G] Middle East unrest: http://r.reuters.com/pad89r Libya graphics: http://link.reuters.com/neg68r ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>

Brent crude for July delivery fell 79 cents to settle at $118.78 a barrel a day after closing at a five-week high. But Brent finished the week up $2.94, or 2.54 percent, from its June 3 close at $115.84, the third consecutive weekly rise.

U.S. July crude fell $2.64 to settle at $99.29 a barrel, slipping as low as $98.60 after pushing below front-month crude's 100-day and 20-day moving averages.

U.S. crude had its second straight weekly loss, down 93 cents, or 0.93 percent, from the June 3 close at $100.22.

Large hedge funds and other speculators sharply cut their net long U.S. crude futures and options positions in the week to Tuesday, the Commodity Futures Trading Commission said in a report released after crude settled. [ID:nEMS1OQN7R]

Crude trading volumes were on pace to surpass 30-day averages, with an hour left in post-settlement trading.

SAUDIS OFFER OIL

"Saudi Arabia is offering oil even though OPEC didn't have an agreement on production," said Hamza Khan, analyst at the Schork Group in Villanova, Pennsylvania.

"And oil is reacting to a stronger dollar and weaker stock market, a reversal after the weak dollar and an equities bounce helped push oil higher on Thursday," Khan added.

Oil prices were pressured early on Friday by news Saudi Arabia is offering more crude to Asian refiners for July, according to industry sources.

The news was evidence Saudi Arabia was unilaterally raising supplies after OPEC's Wednesday meeting did not produce an agreement to boost output targets. [ID:nL3E7HA01L]

The kingdom also intends to boost production in July to 10 million barrels per day (bpd) from 8.8 million bpd in May, according to al-Hayat newspaper. [ID:nLDE7590YT]

OPEC forecast a tightening world oil market in 2011. In its monthly report, OPEC said world demand for its crude oil would average 30.7 million bpd in the second half of 2011, much more than the 28.97 million bpd OPEC produced in May. [ID:nWLA2285]

CHINA'S EXPORT GROWTH SLOWS

China's smaller-than-expected trade surplus in May had some oil analysts and traders wary of slowing growth in the world's No. 2 oil consumer, even as crude imports in May rose slightly versus April and were up 20 percent from the year-ago period. [ID:nL3E7HA0B2] [ID:nL3E7HA0E8]

Copper prices also were pressured by the China trade data. Imports of the key industrial metal slowed in May. [MET/L]

Oil's price slip came even as Libya's turmoil and unrest in Syria and Saudi Arabia's neighbor Yemen continued.

Anti-government protesters in Yemen pressed for the removal of wounded President Ali Abdullah Saleh, who is in Saudi Arabia for medical treatment, while loyalists urged his return. [ID:nLDE6580YA] [ID:nLDE7582AZ] [ID:nLDE7590CL] (Additional reporting by Gene Ramos and Janet McGurty in New York, Zaida Espana and Simon Falush in London and Seng Li Peng in Singapore; editing by Marguerita Choy and Jim Marshall)

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