In prepared comments to be delivered to a Senate committee hearing later on Thursday, Janet Yellen, who is poised to be the next head of the Fed, said she thought the US central bank had more work to do to aid the economy.
“Commodities, including oil, will be very sensitive to any clues about when the tapering will take place,” Reuters quoted Mark Keenan, head of commodities research in Asia at Societe Generale, as saying. Keenan was referring to the timing of any tapering in the Fed’s massive bond-buying programme.
Brent for December delivery was up 18 cents at $107.30 per barrel early on Thursday. The contract closed $1.31 higher on Wednesday, supported by Libyan supply outages.
US crude was 2 cents higher at $93.90 per barrel, after settling up 84 cents.
The Fed’s current $85-billion-per-month in bond-buying has boosted liquidity and appetite for risk assets such as oil, with Yellen’s comments also supporting equities and curbing the dollar.
“The market will be pretty focused on the tone of her address. Hopefully she’ll provide some reasonable clarity, so the market can return to supply and demand dynamics,” said Keenan.
Yellen is due to speak in a Senate hearing later on Thursday.
Investors will also pay close attention to the weekly inventory report from the US Energy Information Administration (EIA), due one hour after Yellen’s speech, for clues about fuel demand in the world’s biggest economy.
Data from industry group the American Petroleum Institute, released after the Wednesday session’s close, showed that US crude stocks rose by 599,000 barrels overall last week, with an increase of 1.7 million barrels at the Cushing, Oklahoma delivery hub.
A Reuters survey showed EIA crude inventories were expected to rise by nearly 1 million barrels.
Supporting oil prices were comments from Israeli Prime Minister Benjamin Netanyahu on Wednesday warning that a “bad deal” with Iran on its nuclear programme could lead to war.
Sanctions against Iran have removed about 1 million barrels per day from global oil markets, but recent high-level talks with the US and other world powers have raised optimism that sanctions could be eased. A new round of negotiations is scheduled for next week.
Outages in Libya helped push Brent higher on Wednesday with the head of Italian oil and gas group Eni saying the situation was getting worse. Output from the Opec member has remained a fraction of its pre-war level of 1.6 million barrels per day due to prolonged protests.
Also on Thursday, investors will be keeping an eye on preliminary euro zone gross domestic product figures for signs of recovery that may lift the euro.