UPDATE 7-Oil prices fall as longs exit ahead of Fed meeting
* U.S. consumer confidence dips in July
* Investors await Fed statement, key economic data this week
* Export curbs limit oil price losses
* Coming up: API weekly inventory data at 4:30 pm EDT
NEW YORK, July 30 (Reuters) - Oil prices slipped on Tuesday as speculators awaiting the outcome of a Federal Reserve meeting retreated from bets on a further rise of U.S. crude.
Market players are holding out for clues from the Fed's two-day meeting on the fate of the U.S. stimulus program that has spurred demand in the world's top oil consumer. The Fed is due to issue a statement on Wednesday.
U.S. inventory data will also offer an insight on its oil demand. U.S. commercial crude oil stockpiles likely fell last week for the fifth straight week, a Reuters poll of six analysts showed on Monday.
Oil futures' fall on Tuesday comes after a rally in both benchmarks to multi-month highs above $109 in July, which attracted bullish speculators and large hedge funds into the market. U.S. crude in particular had rallied to a 16-month high as infrastructure developments allowed oil in landlocked Cushing, Oklahoma, to flow to the U.S. coasts.
"The market was really unnerved by the report Friday showing massive length," Andy Lebow, vice president at Jefferies Bache said, referring to the Commodities Futures Trading Commission's Commitment of Traders Friday report that shows outstanding contracts on different commodities.
"Right now the market is just liquidating. Brent is suffering from the same problem: tremendous growth in speculative length in the last few weeks. As the market moves lower, there's going to be more pressure on it as well."
Brent futures slid 51 cents to $106.94 a barrel by 12:15 p.m. EDT (1615 GMT), after slipping 0.8 percent last week.
U.S. crude fell $1.45 to $103.10. The North Sea benchmark's premium over its U.S. counterpart widened to $3.84.
The liquidation carries with it "the potential that the decline in WTI pulls the rest of the petroleum complex down on top of it," Tim Evans, an energy specialist at Citi Futures Perspective, wrote in a research note.
Investors fretted that the manufacturing surveys later this week might highlight weakness in China.
Activity in China's manufacturing sector may have contracted in July for the first time in 10 months, a Reuters poll showed, signaling a protracted slowdown in the world's second-largest economy as demand at home and abroad sags.
"Chinese data along with actions by the government are clearly pointing to a slowing of the main economic and oil demand growth engine of the world," said Dominick Chirichella of Energy Management Institute.