18 December 2013, News Wires – Brent futures held steady above $108 a barrel on Wednesday after their previous day’s slide, with investors reluctant to lock in positions ahead of a US Fed briefing that is expected to shed light on a plan to taper its monetary stimulus.
Chairman Ben Bernanke is expected to give details later in the day on when the Fed may start to reduce its $85 billion-a-month bond-buying programme, a major factor that has underpinned riskier global assets including commodities and restrained the dollar in recent years. Oil, particularly the US benchmark, also drew support from a likely fall in US crude stocks.
Brent crude gained 9 cents to $108.53 a barrel early on Wednesday, after settling nearly $1 lower. US oil rose 14 cents to $97.36, after ending 26 cents lower.
“In less than 12 hours, we will know about the definitive action the Fed plans to take on its easing programme. Oil and a lot of other markets will take their cues from the comments,” said Ben Le Brun, a market analyst at OptionsXpress in Sydney.
“Nobody is on the front foot or the back foot at the moment.”
Although a steady run of firm US economic data in recent weeks has raised speculation the Fed could reduce its bond buying at its policy meeting ending later in the day, a majority of investors still think any tapering will happen next year.
Apart from oil, Asian shares and gold held firm on Wednesday, while the dollar weakened.
“My personal view is that we may get some form guidance on when the Fed may start to taper its stimulus,” Le Brun said. “There is nothing to make the Fed rush at the moment. They are likely to play it very, very safe.”
Oil is also drawing support from demand growth hopes at the world’s largest oil consumer after industry data showed a fall in crude stockpiles.
Crude inventories fell by 2.5 million barrels in the week to 13 December to 367.8 million barrels, data from industry group the American Petroleum Institute showed, compared with analysts’ expectations for a decrease of 2.3 million barrels.
Gasoline stocks also fell by 481,000 barrels, compared with expectations for a 1.9 million barrels gain. Distillate fuels stockpiles, which include diesel and heating oil, fell by 434,000 barrels versus expectations for a 400,000-barrel gain, the data showed.
Investors are now awaiting data from the US Energy Information Administration (EIA) to get a clearer picture of the country’s demand outlook.
Oil also drew support from worries over tighter supplies due a prolonged outage at Libya.
Investors worry Libya will slide into chaos as the Tripoli government struggles to rein in militias and tribesmen who helped topple Muammar Gaddafi in 2011 but kept their weapons and control parts of the Opec-member country. The unrest has cut vital oil exports to 110,000 barrels per day from more than 1 million bpd in July.