29 October 2013, News Wires – Brent crude futures edged lower toward $109 a barrel on Tuesday ahead of the Federal Reserve’s policy-setting meeting, but held within sight of a near one-week high as a sharp drop in Libyan oil exports rekindled worries over supply.
Libya’s crude exports have dropped to less than 10% of capacity, or 90,000 barrels per day, compared with a capacity of more than 1.25 million bpd, extending the worst disruption in Libya’s oil industry since the 2011 civil war.
London Brent crude for December delivery was trading 49 cents lower at $109.12 a barrel early on Tuesday, after settling up $2.68 on Monday. US crude for December delivery was down 32 cents at $98.36 a barrel.
Libya’s Prime Minister said oil exports from Libya’s eastern Hariga port with a capacity of 110,000 bpd will resume after one week following a two-month blockade due to strikes and protests, but there were scant projections for further restarts.
“I think the market will likely go sideways today after its one-sided reaction the previous day,” said Kaname Gokon, deputy general manager at Tokyo-based broker Okato Shoji.
Brent oil is expected to retrace to $108.46 per barrel, as it faces resistance at $109.81, Reuters market analyst Wang Tao said.
The market is waiting for commentary from the Federal Reserve’s policy-making meeting, which starts later in the day, after Monday’s data showed US manufacturing output barely rose in September and contracts to buy previously owned homes recorded their largest drop in nearly three and a half years.
The Fed is widely expected to maintain its current level of economic stimulus as it awaits more evidence of how badly Washington’s recent budget battle hurt the US economy.
US oil inventories likely rose 3.2 million barrels last week, while distillates and gasoline fell 1 million barrels each, a preliminary Reuters poll showed ahead of the weekly report by the American Petroleum Institute later in the day.
Investors will also keep an eye on a two-day meeting of experts from Iran and six world powers on Wednesday.
Iran is planning to offer international companies more lucrative contracts to attract at least $100 billion worth of investment in its oilfields over the next three years, the Financial Times reported on Monday.