ET:Brent slips towards $108 on Libya output rise, easing Syria fears
LONDON: Brent crude steadied above $108 a barrel on Wednesday as world powers held talks to eliminate Syria's chemical weapons - easing concerns that oil supply from the Middle East would be at risk.
But investors remained cautious ahead of the outcome of a US Federal Reserve policy meeting, at which the central bank is expected to reduce its commodity-boosting monetary stimulus.
Brent edged 4 cents higher to $108.23 a barrel by 0925 GMT, after slipping to its lowest in more than a month in the previous session.
US crude gained 69 cents to $106.11, after settling $1.17 per barrel lower on Tuesday.
"The market continues to now focus on the new diplomatic plan for solving Syria's chemical weapons issues," Dominick Chirichella of Energy Management Institute said.
"Currently market participants are in a Syrian risk premium shedding mode as they try to determine if diplomacy will work."
Diplomats from five key nations kicked off talks on Tuesday on a Western-drafted U.N. Security Council resolution to eliminate Syria's chemical weapons.
US crude inventories fell by 252,000 barrels in the week to Sept. 13, compared with analysts' expectations for a drop of 1.4 million barrels in a Reuters poll, data from industry group the American Petroleum Institute showed.
Oil inventory data from the US government's Energy Information Administration is due at 1430 GMT.
The resumption of some Libyan production kept a lid on prices. A combination of strikes, militias and political activists have blocked the majority of Libya's oilfields and ports since the end of July.
Libyan oil supplies are expected to rise to between 400,000 and 450,000 barrels per day (bpd) as one of the biggest western oilfields, El Sharara, ramps up after workers resumed pumping on Monday. The country's oil production, however, is still far below its pre-war level of 1.6 million bpd.
Investors were also awaiting the outcome of a two-day Fed meeting at which the US central bank is expected to cut its monthly bond purchases by at least $10 billion.
While the likely outcome of the Fed discussions might already be priced into oil, a bigger tapering could pose a risk to oil prices and prompt selling, analysts said.
