LONDON, July 31 (Reuters) - Brent crude slipped towards $106 per barrel on Wednesday as investors awaited the outcome of a U.S. Federal Reserve meeting and economic data to gauge the oil demand outlook from the world's top consumer.
But prices were set to post their biggest monthly rise in 11 months, helped by gains earlier in July as political tensions in the Middle East kept alive concerns about global oil supplies.
Brent slipped 30 cents to $106.31 a barrel by 0915 GMT but was on track for a monthly rise of 4.1 percent.
U.S. crude rose 37 cents to $103.45 and was headed for a nearly 7 percent monthly gain. It hit a 16-month high in early July.
The Fed will release a post-meeting statement at 1800 GMT. GDP data on Wednesday, and non-farm payrolls, which may provide an indication of Fed policy, are due on Friday.
"All eyes are on the Fed statement, and I think in terms of the short-term trajectory for risk assets, that's going to be the focal point, followed by non-farm payrolls and other U.S. data," said Ben Le Brun, an analyst at OptionsXpress in Sydney.
"If there's any suggestion the Fed is going to taper the current bond buying program as soon as September, then that's U.S. dollar positive and therefore a negative impact on everything that's weighed in U.S. dollars."
Both the Brent and U.S. oil benchmarks are set to post their best monthly performance since August 2012.
U.S. futures were supported by the American Petroleum Institute's report that showed commercial crude stockpiles fell for a fifth straight week.
Market participants are now waiting for the more closely watched inventory report from the U.S. Energy Information Administration later in the day.
Investors were also awaiting manufacturing data later this week from China, which could highlight weakness in the world's No. 2 oil consumer.
Activity in China's manufacturing sector may have contracted in July for the first time in 10 months, a Reuters poll showed, signalling a protracted slowdown as demand at home and abroad sags.
Pumping of crude oil resumed through the Kirkuk-Ceyhan pipeline last night after repairs were completed following a bomb attack over the weekend.
Oil outages in Iraq, South Sudan, Libya and Iran have combined to help keep oil prices well above $100 a barrel, partly countering the rise in U.S. shale oil supply and worries about Chinese demand. (Editing by Jane Baird)
