30 October 2013, News Wires – 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 a higher-than-expected weekly stock build weighed on market sentiment for US oil futures.
Traders were also looking ahead to comments from the US Federal Reserve’s two-day policy-making meeting later in the day, but any impact on oil prices may be muted with the US central bank widely expected to maintain its massive economic stimulus programme.
London Brent crude for December delivery was down 30 cents at $108.71 a barrel early on Wednesday, after settling down 60 cents on Tuesday. US crude for December delivery was 57 cents lower.
A mixed bag of US economic data over the last few days has reinforced expectations the central bank will not taper its $85 billion of monthly asset purchases until March at the earliest.
“If the FOC acts as expected and there is no change in their position, it will likely support oil prices, but not cause them to be pushed up significantly,” said Tetsu Emori, a commodities fund manager at Astmax Investments.
Libya’s crude exports have slumped to about 90,000 barrels per day, less than 10% of capacity, as protests have halted operations at ports and fields, but Libya’s prime minister said on Monday exports from the eastern port of Hariga with a capacity of 110,000 bpd would resume after one week.
Weighing on US futures, US crude inventories rose by 5.9 million barrels in the week to 25 October, compared with analysts’ expectations for an increase of 2.2 million barrels, statistics from the American Petroleum Institute showed on Tuesday.
The US Energy Information Administration will release its own oil inventories statistics later on Wednesday.
“If we don’t have any changes to (the uncertainty in) Libya or the tapering, I think just seasonally as we go into winter, runs will ramp up steeply in the United States, and these crude builds we’re seeing now will start to draw down.” said Tony Nunan, a risk manager at Mitsubishi.
“So we could possibly see WTI go back up over $100 and Brent stay supported at $108,” Nunan added.
Investors will also keep an eye on a series of technical and diplomatic meetings on Iran’s nuclear programme that could pave the way for an easing of sanctions on Iranian crude exports.
But any increase in exports from the Islamic state looks to take some time, as the US Senate is debating fresh sanctions aimed at slashing Iran’s oil sales in half within a year of the plan being signed into law, an influential senator said.