Brent crude edged down below $109 in early Wednesday trade as fears waned about the extent of disruptions to petroleum exports from OPEC member Libya, while ahigher-than-expected weekly stock build weighed on market sentiment for US oil futures, www.upstreamonline.com reported.
Traders werealso looking ahead to comments from the US Federal Reserve’s two-daypolicy-making meeting later in the day, but any impact on oil prices may bemuted with the US central bank widely expected to maintain its massive economicstimulus programme.
London Brentcrude for December delivery was down 30 cents at $108.71 a barrel early onWednesday, after settling down 60 cents on Tuesday. US crude for Decemberdelivery was 57 cents lower.
A mixed bagof US economic data over the last few days has reinforced expectations thecentral bank will not taper its $85bn of monthly asset purchases until March atthe earliest.
“If theFOC acts as expected and there is no change in their position, it will likelysupport oil prices, but not cause them to be pushed up significantly,” a CommoditiesFund Manager at Astmax Investments, Tetsu Emori, said
Libya’scrude exports have slumped to about 90,000 barrels per day, less than 10 per centof capacity, as protests have halted operations at ports and fields, butLibya’s prime minister said on Monday exports from the eastern port of Harigawith a capacity of 110,000 bpd would resume after one week.
Weighing onUS futures, US crude inventories rose by 5.9 million barrels in the week to 25October, compared with analysts’ expectations for an increase of 2.2 millionbarrels, statistics from the American Petroleum Institute showed on Tuesday.
The US Energy Information Administration will release its own oil inventoriesstatistics later on Wednesday.
“If wedon’t have any changes to (the uncertainty in) Libya or the tapering, I thinkjust seasonally as we go into winter, runs will ramp up steeply in the UnitedStates, and these crude builds we’re seeing now will start to draw down.” aRisk Manager at Mitsubishi, Tony Nunan, said.
“So wecould possibly see WTI go back up over $100 and Brent stay supported at$108,” Nunan added.
Investorswill also keep an eye on a series of technical and diplomatic meetings onIran’s nuclear programme that could pave the way for an easing of sanctions onIranian crude exports.
But anyincrease in exports from the Islamic state looks to take some time, as the USSenate is debating fresh sanctions aimed at slashing Iran’s oil sales in halfwithin a year of the plan being signed into law, an influential senator said.
Information from Punch was used in this report.