* U.S. crude stocks rose 8.5 mln bbls last week - EIA
* Brent breaches 50-, 200-day moving averages, accelerating
* BOJapan to lift asset purchases amid global slowdown
* Possibility Spain needs bailout weighs on oil
* Coming up: U.S. jobless claims data 8:30 a.m. EDT Thursday
(Adds detail paragraphs 8,10-14)
By Robert Gibbons and Jonathan Leff
NEW YORK, Sept 19 Oil prices slumped on
Wednesday as Saudi efforts to tame prices and a massive rise in
U.S. crude inventories after Hurricane Isaac fuelled a third day
of heavy fund liquidation, one of the biggest sell-offs in more
than a year.
European benchmark Brent crude crashed below the 50- and
200-day moving-average, sparking technical selling that pushed
it to the lowest in six weeks. Big hedge funds were seen
liquidating bullish positions built ahead of the Federal
Reserves' third dose of stimulus, announced last week.
The rout began late on Monday with an abrupt flash crash
triggered by a large sell order from a macro-fund, traders say.
Prices declined the next two days, taking this week's slide
to more than 7 percent after a Gulf source said Saudi Arabia
would act to lower prices that hit four-month peaks on Friday.
"People are thinking that maybe the Saudis are going to
produce more, and some funds are taking the opportunity to
liquidate positions," said Christopher Bellew at Jefferies
Prices received more pressure on Wednesday after U.S. Energy
Information Administration (EIA) data showed crude oil
stockpiles jumped 8.5 million barrels, far more than expected.
Brent November crude fell $3.84, or 3.4 percent, to
settle at $108.19 a barrel, having recovered from a session
trough of $107.40, the lowest since Aug. 3.
Brent's three-day drop was 7.26 percent based on
settlements, the biggest since a 7.73 percent dive in early
June. That, in turn, was the biggest percentage three-day slide
since August, 2011.
U.S. October crude, which expires on Thursday, fell
$3.31, or 3.47 percent, to settle at $91.98 a barrel after
dropping below the 50-day moving average of $93.08. U.S.
November crude fell $3.32, to $92.30 a barrel.
Total Brent trading volume was 47 percent above the 30-day
average, with U.S. crude turnover 40 percent above its 30-day
U.S. heating oil and RBOB gasoline futures
joined in the retreat, dropping more than 2 percent.
Gasoline settled at $2.8286 a gallon, a 7.04-cent drop that
pulled it below its 100-day moving average. The $2.8031 session
low was the lowest since Aug. 1.
Gasoline stocks fell 1.41 million barrels last week, while
total distillate inventories dipped 322,000 barrels, the EIA's
weekly report said.
U.S. distillate demand over the four-weeks to Sept. 14 was
down 11.2 percent versus the year-ago period, the EIA said.
AFTER SPR TALK, MARKET EYES SAUDIS
Oil traders had worried for weeks about the possibility that
the U.S. government could tap strategic oil reserves to address
the threat to economic growth from surging prices.
Oil came under more pressure on Tuesday when a senior Gulf
source said Saudi Arabia is working to lower oil prices,
producing around 10 million barrels per day.
Ali al-Naimi, Saudi Arabia's oil minister, had said on Sept.
10 that OPEC's top exporter was worried about high oil price and
would take steps to moderate them.
"The straw that broke the camel's back here is the Saudi
news yesterday," said Freepoint Commodities analyst Brison
Bickerton. "Any time the market's had a long run with traders
building bullish positions over a number of weeks you're more
likely to get a reversal."
In the past 10 weeks, big speculators and hedge funds added
nearly 100,000 net long positions -- equivalent to 100 million
barrels -- in U.S. crude oil and options futures contracts. It
was one of the biggest and fastest such build-ups since 2010,
Crude prices got a brief boost early on Wednesday when Japan
followed the U.S. Federal Reserve's stimulus with its own
decision to ease monetary policy by boosting asset purchases in
the face of a slowing global economy.
But oil industry sources said concerns about debt-laden
Spain's finances and the possibility of Spain requesting a
bailout pulled oil back.
(Additional reporting by Simon Falush in London and Luke
Pachymuthu in Singapore; Editing by Marguerita Choy, David
Gregorio and Bob Burgdorfer)