OREANDA-NEWS. April 26, 2011. ICE Brent crude slid 74 cents to USD 122.92/bbl, while NYMEX light, sweet crude for June delivery fell as much as USD 1.08/bbl to USD 1.13 to USD 111.15, and traded at USD 111.17.

US crude futures pulled back by more than USD 1 after Saudi Aramco’s CEO said executives said the kingdom was not comfortable with current oil prices and as investors cut risk ahead of the upcoming Fed meeting.

Aramco CEO Khalid al-Falih told an industry gathering in Seoul yesterday that the kingdom is not comfortable with the present level of oil prices and is concerned about the impact it could have on the global economy. Crude dipped after three days of gains, retreating 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 ends tomorrow. Saudi Arabia claims to have enough spare capacity to meet supply knocked out by the Libyan civil war and growing demand in India and China, although Falih said he has yet to see any signs of tightening in global oil supply. As we can see, Saudia Arabia is prudently looking for a comfort range which reportedly lies within the ballpark of USD 80-110.

Market watchers will be seeking guidance from Fed Chairman Ben Bernanke’s post-meeting news conference Wednesday to see how the Fed intends to wind up its ultra-loose monetary policy. The market appears to be treading cautiously, given that any signs that the Fed could tighten dollar supply would push crude gains lower.

NYMEX futures lost more than Brent contracts yesterday partly on expectations that US crude oil stockpiles are expected to have risen last week, with crude imports stronger than demand from refineries, a poll ahead of weekly inventory reports showed Monday.

The anticipated build comes on the heels of a 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 this evening followed by the EIA mid-week inventory report due out tomorrow.

The strengthening of the US dollar against the euro also drove prices down yesterday. The euro slipped after European Central Bank Governor Jean-Claude Trichet said he shares the view that a strong dollar is in the interest of the United States. NYMEX crude futures command strong support at USD 110/bbl and will not likely slide below that level for the time being, we believe. But if the Fed sticks to its current policy we should see more upside after the FOMC meeting wraps up tomorrow.

On the geopolitical front, price support remains as the civil war continues to rage in Libya, anti-government uprisings are still fierce and bloody in Syria and Yemen, the US has stepped up drone air raids against the Gaddafi regime, Italy is taking part in bombing selected military targets in the country, while oil demand continues to rise in major consumers such as China and India.

Moving forward, we think the Fed’s nod to its previous loose monetary policy will be a trigger for WTI and Brent, with investors mostly sidelined awaiting hints for an exit strategy ahead of Bernanke’s comments in tomorrow’s press conference.