NEW YORK Oil futures fell for a second straight session on Tuesday, pressured by concerns about sputtering global economic growth and by indications that OPEC's top producer Saudi Arabia is working to drive down prices.
Crude futures extended the previous session's slide as investor focus shifted from the likely economic benefit of additional stimulus to the economic problems that prompted the U.S. Federal Reserve to launch its bond-buying program.
A senior Gulf source said Saudi Arabia is working to lower oil prices and is producing around 10 million barrels per day, putting additional pressure on oil prices.
The source also said most members of the Organization of the Petroleum Exporting Countries want oil prices around $100 per barrel and would boost production over the next few months.
"Unless there is a major supply disruption in the Middle East, there is nothing to push it higher," said analyst Andrey Kryuchenkov at VTB Capital. "Saudi will seek to drive it closer to $100 and everyone knows it."
Brent prices rose seven straight sessions before settling 2.4 percent lower on Monday, benefiting first from growing expectations that the Fed would act to bolster the economy, and subsequently from the actual launch of the stimulus program on Thursday after a two-day policy meeting.
Brent November crude fell $1.76 to settle at $112.03 a barrel. A combined 4.25 percent loss to start this week was the biggest two-day percentage drop since June 21, according to Reuters data.
Brent fell as low as $111.61, below the 200-day moving average of $111.87, a technical level tracked by traders.
U.S. October crude fell $1.33 to settle at $95.29 a barrel, below the 200-day moving average of $96.57. After reaching $97.23, the $95.11 low was hit in post-settlement trading. The October contract expires on Thursday.
U.S. November crude fell $1.33 to settle at $95.62.
U.S. total crude trading volumes were tepid, lagging the 30-day average by 2 percent. Brent turnover outpaced U.S. crude and surpassed Brent's 30-day average by 20 percent.
U.S. RBOB gasoline and heating oil futures dropped another 1 percent on Tuesday, after they matched crude futures' 2.4 percent drop on Monday.
Gasoline slumped 4.43 cents to settle at $2.8990 a gallon, leaving it well below the 200-day moving average of $2.9452 and in sight of the 100-day moving average of $2.8870.
U.S. retail gasoline demand in the two weeks to September 14 fell 1 percent from a year earlier as prices kept rising, according to a report from MasterCard.
Monday's steep, rapid intraday sell-off left Brent down more than $5 at the day's low and U.S. crude off more than $4.
The sell-off came after Brent and U.S. crude did not extend the previous week's surge on the Fed stimulus that sent prices to four-month highs.
Traders explained the plunge variously as stemming from computer-based trading, sell stops triggered in a session characterized by light trading volume on the Rosh Hashanah holiday and from heightened expectations that the United States and its allied consumer nations would release oil reserves.
A trader pressing the wrong key was not the likely cause of the plunge, Commissioner Bart Chilton of the Commodity Futures Trading Commission told Reuters.
The White House on Tuesday again said the United States was monitoring oil markets and that all options remain on the table, including a release of strategic oil reserves.
U.S. crude stocks rose 2.4 million barrels last week, the industry group American Petroleum Institute said on Tuesday, a bigger rise than expected. <API/S>
Gasoline stocks rose 135,000 barrels and distillate stocks fell 1.1 million barrels, the API said.
Crude and distillate stocks were expected to be up 1.0 million barrels, with gasoline inventories up 1.2 million barrels, a Reuters survey of analysts taken ahead of weekly reports showed. <EIA/S>
A stronger dollar .DXY on Tuesday also weighed on oil prices, as the euro fell against the U.S. currency on uncertainty about whether or not debt-stressed Spain will request a bailout. <USD/>
A strengthened U.S. currency can put pressure on dollar-denominated commodities such as oil.
In addition to weak U.S. growth and Europe's debt crisis, No. 2 oil consumer China has sparked concern as the country tries to sustain economic growth and deal with disputes with neighbors.
China posted a monthly capital outflow in August for the third time this year, likely prompted by investors pulling funds from the country in the face of slowing growth and rapidly deteriorating corporate profits.
Anti-Japan protests continued across China on Tuesday, escalating a maritime dispute which has forced major Japanese brand-name firms to suspend business there.
(Additional reporting by Alex Lawler in London and Luke Pachymuthu in Singapore; Editing by Sofina Mirza-Reid, Marguerita Choy, David Gregorio and Bob Burgdorfer)