Oil slips further as Saudis seen opening taps

Oil slips further as Saudis seen opening taps

LONDON (Reuters): Oil prices slipped again on Friday amid mounting confidence that OPEC giant Saudi Arabia is quietly pumping more crude to cool overheated energy markets.

North Sea Brent crude futures for September were down 26 cents at US$28.01 a barrel after falling 61 cents on Thursday and 43 cents fall on Wednesday.

U.S. light crude was down 36 cents at $29.41.

Brent is now $1.78 or 6 percent down on the week as reports of more tanker traffic and extra exports have convinced traders a surge of new Saudi oil is heading for the market.

"There is a realization that extra Saudi barrels are out there," said one broker. "This was especially brought home by the tanker fixtures. That had a real impact on the market."

Crude's losses have also been spurred by a fall in U.S. gasoline prices with the passing of the peak demand season in the United States, the world's largest energy market.

Despite gasoline's fall U.S. authorities have voiced fresh concern about the possible impact of high energy prices on the world's most powerful economy.

Federal Reserve Chairman Alan Greenspan told lawmakers on Thursday he was concerned about the rising prices and increased demand for energy in the United States.

"I'm not worried as much on the issue of inflation because we can contain that. I'm worried about the instability that (the rising energy market) creates within the economy and the difficulties that might emerge as a consequence," Greenspan said.

U.S. Energy Secretary Bill Richardson called on the Organization of the Petroleum Exporting Countries to follow Saudi Arabia's lead in signaling a supply increase.

"It is clear the world needs more oil," Richardson told reporters after a Senate hearing on fuel prices.

Major oil companies said Saudi Arabia had called them on Wednesday and Thursday with an offer of extra supply in a fresh sign that the kingdom plans to make good on a two-week-old pledge to up output by 500,000 barrels per day (bpd).

The Saudi move occurred despite mixed messages on output policy from cartel members that has increased volatility on the futures markets that set the price of world energy.

Venezuelan OPEC President Ali Rodriguez said Saudi Arabian Oil Minister Ali al-Naimi had assured him again on Thursday that the kingdom would not act alone in a move to lower oil prices.

Rodriguez told reporters in Caracas he had no information on the reports that Saudi had already started leaking extra barrels to clients.

However, tanker brokers said they had seen evidence of higher Saudi exports in shipping fixtures.

"More oil is being shipped," said Sultan Riaz of Geneva- based Marinav Shipping and Trading, who estimated July liftings from the Middle East were due to total 35.5 million tons this month from a previous peak this year of 34.5 million tons.

Saudi has said it would like to see prices subside to $25 a barrel to prevent long-term damage to petroleum demand prospects and to dampen inflationary pressures in the West.

There was minimal continued impact from word on Thursday that Royal Dutch/Shell had shut in 80,000 bpd of Nigerian crude output after a fire forced it to close down three flowstations in the volatile Niger Delta.