* S. Arabia's Naimi says happy with current oil market
* China Oct oil demand up 6.5 pct on yr to near record
* Coming Up: Germany wholesale price index; 0700 GMT
By Manash Goswami
SINGAPORE, Nov 12 Brent oil slipped below $109 a
barrel on Monday due to demand growth concerns as President
Barack Obama struggles to reach a deal to avert a looming U.S.
fiscal calamity, overshadowing upbeat data from key consumer
Worries about the United States tipping into recession due
to the "fiscal cliff" of about $600 billion in expiring tax cuts
and spending reductions - scheduled to take effect in January -
weighed across financial markets, pushing Japan's Nikkei average
to a four-week low and limiting movement in other Asian
Obama said he was prepared to compromise with Republicans to
avert the looming calamity, but insisted a tax increase for the
rich must be part of any bargain.
"Traders will be on the sidelines till the time there is
clarity on the core risk issues concerning the global economy,"
said Ric Spooner, chief market analyst at CMC Markets in Sydney.
Front-month Brent crude slipped 45 cents to $108.95
a barrel by 0207 GMT, snapping two straight days of gains.
U.S. oil was down 17 cents at $85.90, after ending up
more than 1 percent last week following a three-week slide.
Oil prices were also pressured by data showing Japan's
economy shrank 0.9 percent in July-September from the previous
quarter. It was the first contraction in three quarters,
suggesting faltering global demand and weak consumer spending
may push the economy into a mild recession.
Brent is expected to revisit its Nov. 8 low of $106.12 per
barrel as it seems to be consolidating within a triangle,
according to Reuters technical analyst Wang Tao.
But losses in oil were checked by data over the weekend
showing China's implied oil demand in October surged.
Implied oil demand in China, the world's second-largest fuel
user, grew 6.5 percent in October from a year earlier, close to
September's record high as demand was underpinned by fuel
inventory building and new production capacity.
"It was encouraging to see an improvement, though it was not
really a game changer," Spooner said, referring to the China
China used roughly 9.71 million barrels per day (bpd) of oil
last month, close to September's record high of 9.79 million
bpd, according to Reuters calculations based on refinery output
and net imports of refined fuels.
The global oil market is in good shape and Saudi Arabia is
happy with the current oil price, Saudi Oil Minister Ali
al-Naimi said, expressing satisfaction over a Gulf Arab effort
which kept prices in check.
OPEC heavyweight Saudi Arabia and its Gulf Arab allies have
kept output high all year to keep prices under control and the
extra oil has helped reverse a spike in prices that took Brent
crude to $128 a barrel in March.
"The market really is in good shape. We are very happy with
the situation in the market," Naimi told reporters on the
sidelines of an oil and gas exhibition in Abu Dhabi.
(Editing by Himani Sarkar)