* Oil posts largest daily fall in 2013 on Wed on hedge fund
* Fed mulls slowing bond buying programme; Saudi eyes higher
* U.S. crude stocks up 3 mln bbls last week -API
* Coming Up: EIA weekly oil inventories; 1600 GMT
By Florence Tan
SINGAPORE, Feb 21 Oil extended losses for a
second session on Thursday, with Brent slipping toward $115 a
barrel after market rumours that a hedge fund was forced to
liquidate substantial commodity positions led to the fuel's
largest daily fall in 2013 the previous day.
Traders continued to liquidate long positions on Thursday as
oil prices fell below support levels on technical charts,
triggering more sell orders.
Bearish news of a potential rise in Saudi Arabia's oil
output and a possible slowdown in the bond buying programme of
the U.S. Federal Reserve also gave investors a chance to sell
and take profit from a Brent bull run that has lasted nearly
three months, traders said.
Brent crude fell as low as $114.95 and was down 36
cents at $115.24 a barrel by 0311 GMT. The contract is trading
at its lowest in more than two weeks after settling down almost
$2 on Wednesday. U.S. crude futures for April slipped 57
cents to $94.65 after closing at their lowest in over a month.
"Long position holders have been looking to sell for
profit-taking," said Yusuke Seta, a commodity sales manager at
Newedge Japan. "I guess this is a good time to sell."
Hedge funds and other large speculators have nearly doubled
their bets that oil prices will rise since mid-December, and
have amassed positions in Brent and U.S. crude oil futures and
options equivalent to around 440 million barrels of oil,
regulatory and exchange data shows.
Oil "was on helium again and got ahead of fundamentals,"
said Tony Nunan, a risk manager at Mitsubishi Corp.
"But I think everyone is concerned because high frequency
traders make the price moves more violent," he said, adding that
Ichimoku cloud charts showed the next support level for Brent
was at $114.31.
"Saudi was one of the catalysts, but the other is fear that
the Fed might reduce QE (quantitative easing)," Nunan said.
Global equities also slipped on Wednesday after minutes from
a Federal Reserve policy meeting last month showed some
officials think the central bank might have to slow or stop
buying bonds before seeing the pickup in hiring the programme is
designed to deliver.
The world's top oil exporter, Saudi Arabia, could raise its
oil output in the second quarter to satisfy higher demand from
China and feed economic recovery elsewhere, oil industry sources
Investors are also looking ahead to oil inventories data out
of the United States later on Thursday and talks on Iran's
nuclear programme next week for price direction.
U.S. crude stocks rose on higher imports while oil product
inventories fell last week, data from the American Petroleum
Crude stockpiles rose 3 million barrels in the week to Feb.
15, the data showed, as imports rose 117,000 barrels per day
(bpd) to 7.72 million bpd. Analysts polled by Reuters had
expected crude stocks to rise 1.8 million barrels.
For Iran, major powers are ready to make "a substantial and
serious offer" to Tehran during talks next week in return for
concessions on its nuclear programme, a Western diplomat said.
(Reporting by Florence Tan; Editing by Clarence Fernandez)