* Saudi cuts output, believes market is well-supplied
* Finnish vote puts Portuguese bail-out under scrutiny
* Coming Up: Euro zone April consumer confidence; 1400 GMT
* U.S. April NAHB housing market index; 1400 GMT
(Recasts with fresh quotes, prices, previous SINGAPORE)
By Claire Milhench
LONDON, April 18 (Reuters) - Brent crude fell to $123 on
Monday and U.S. crude dropped by more than $1 on fears that high
prices were hurting demand, after a cut in output from oil
exporter Saudi Arabia, which said the market was over-supplied.
The kingdom reduced output by 800,000 barrels per day (bpd)
to 8.292 million bpd in March from February, Saudi Oil Minister
Ali al-Naimi said on Sunday. [] "The market is
over-balanced," he said.
The Kuwait oil minister on Monday added that high oil prices
could form a significant economic burden for many
import-dependent countries [].
ICE Brent crude <LCOc1> was down 55 cents at $122.90 a
barrel by 0830 GMT while U.S. crude <CLc1> fell 70 cents to
$108.96 a barrel. Earlier it had fallen over $1 to $108.55.
Carsten Fritsch, an analyst at Commerzbank in Frankfurt,
said the market was down in reaction to the Saudi statement.
"They said they made the cut because of over-supply and weak
demand. That should further the discussion as to whether high
oil prices are starting to dampen oil demand," Fritsch said.
On Monday, Naimi warned of continued weakness in the global
economy: "The recovery remains patchy," he said.
Oil prices fell early last week on concern demand may be
eroding under pressure from high prices, but rebounded on Friday
following encouraging U.S. economic data.
Brent has retreated from a 32-month peak of $127.02 hit
earlier this month.
The conflict in Libya escalated over the weekend, after
Muammar Gaddafi's forces fired rockets on Sunday at rebels
stationed along the edge of Ajdabiyah, sending some residents
fleeing from the eastern town, witnesses said. []
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More on Middle East unrest: [] []
Libya graphics http://link.reuters.com/neg68r
Interactive graphic http://link.reuters.com/puk87r
Graphic on previous recessions and the oil price:
http://r.reuters.com/vyx88r
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The oil market is still seeking a close replacement for very
high quality Libyan sweet crude oil lost due to the conflict in
the North African nation, OPEC Secretary General Abdullah
Al-Badri said on Monday. []
Refiners have shown little appetite for a replacement blend
offered by Saudi Arabia to plug the gap.
EURO BAILOUT FEARS
The dollar strengthened against the euro after Finnish
voters handed the anti-euro party True Finns a crucial role in
parliament and possibly government. A stronger dollar <.DXY>
makes oil more expensive for buyers using other currencies.
The True Finns have said they will oppose a bail out for
Portugal, and Finland requires parliamentary approval to
participate in any bail out package. []
"It shows rising resistance in countries that are supposed
to give the money," said Fritsch. "Finland is one of only four
countries in the eurozone that are supposed to be payers."
Eurozone consumer confidence figures for April are due later
on Monday. "If it is down sharply, it could be seen as further
confirmation that higher oil prices are starting to weigh on
sentiment and will hurt demand going forwards," said Fritsch.
China raised banks' required reserves on Sunday for the
fourth time this year to curb inflation, but the impact on oil
prices was muted as further tightening in Chinese monetary
policy was widely expected, analysts said.
The market will be closely watching a clutch of key U.S.
corporate earnings during this holiday-shortened week to gauge
the impact of high oil and commodities prices on the world's
biggest energy consumer.
(Additional reporting by Francis Kan in Singapore; editing by
James Jukwey)
