UPDATE 3-Brent falls below $111 after Fed minutes
* Fed worries about side effects of stimulus package
* U.S. crude stockpiles fell 12 mln bbls last week -API
* Coming up: U.S. Dec non-farm payrolls at 1330 GMT
* U.S. EIA weekly oil stocks data at 1530 GMT
(Updates previous SINGAPORE)
LONDON, Jan 4 (Reuters) - Oil fell below $111 a barrel on Friday after U.S. Federal Reserve policy makers indicated they may at least slow a stimulus programme this year, threatening the economic recovery in the world's biggest fuel consumer.
Further talks in Washington next month to tackle the debt ceiling, and signs of hesitation within the Fed about more increases to the central bank's $2.9 trillion balance sheet, weighed on prices.
Brent crude for February delivery tumbled $1.20 to $110.94 by 0951 GMT. U.S. crude was down $1.04 at $91.88.
"Most people do not want to take further risks in equities and commodities if the QE (quantitative easing) programme is not going to continue beyond 2013," said Tetsu Emori, a commodities fund manager at Astmax Investments in Tokyo.
While the Fed said it would keep buying bonds to boost the economy over coming months, minutes of a December meeting showed that some officials are increasingly concerned about the programme's potential risk to financial markets.
Several officials thought it would be appropriate to slow or stop asset purchases well before the end of 2013.
Yet oil could get a boost later on Friday if jobs and oil inventory data from the United States affirms that the world's largest economy is on track for a recovery.
Thursday's data from the American Petroleum Institute showed a steeper-than-expected drop of 12 million barrels in crude inventories in the week to Dec. 28. Analysts were expecting a 900,000 barrel draw. Data from the U.S. Energy Information Administration is due later on Friday.
The U.S. government will also release non-farm payroll data, a key economic indicator that could offer further evidence of underlying strength in the economy as 2012 ended. The latest jobs data showed that private-sector employers shrugged off the looming budget crisis and stepped up hiring in December.
"If the positive news continues, there is likely to be a piling on of traders, as the story for 2013 becomes an even more compelling one," Jason Schenker, president of Texas-based Prestige Economics, said in a note.
Yet oil product prices may come under pressure as supply will rise when Motiva Enterprises restarts its new 325,000 barrel-per-day (bpd) crude distillation unit at its Port Arthur, Texas, refinery.
(Additional reporting by Florence Tan in Singapore; Editing by Jason Neely)