BD:Brent crude rises on hope for continued US stimulus
LONDON — Brent oil rose towards $108 a barrel on Thursday, bolstered by Federal Reserve comments that reassured investors the US would maintain stimulus measures for now, and a warning of likely rising prices from the International Energy Agency (IEA).
US crude fell, however, pressured by expectation of a rise in US crude inventories.
Brent for December delivery was up 34c at $107.46 a barrel at 9.37am GMT. The contract closed $1.31 higher on Wednesday, supported by Libyan supply outages.
It is up 2.2% this week, on track for its biggest such gain since late August.
US crude was 17c lower at $93.70 a barrel, after settling 84c higher.
"The recent easing of prices may be relatively short-lived," the IEA said in its monthly report. "End-user demand is on the verge of a seasonal ramp-up while refinery throughputs look set for a steep rebound in November and December."
In prepared comments to be delivered to a Senate committee hearing later on Thursday, Janet Yellen, who is to be the next head of the Fed, said she thought the US central bank had more work to do to aid the economy.
"There were a few decent data points so there was some concern that the Fed would soon announce the tapering soon, but the comments have pushed expectations of timing back," Energy Aspects geopolitical analyst Richard Mallinson said.
He was referring to the timing of any reduction in the Fed’s current $85bn-a-month bond-buying programme.
Ms Yellen is due to speak in a Senate hearing at 3pm GMT.
Oil markets look well supplied in the short term but prices could rise in the next few months due to a seasonal increase in demand and production problems in some Organisation of Petroleum Exporting Countries (Opec) producers, the IEA said.
The West’s energy watchdog said oil was likely to stay volatile with prices responding to political turmoil in Libya, security problems in Iraq and stronger consumption during the northern hemisphere winter.
Investors will also pay close attention to the weekly inventory report from the US Energy Information Administration, due at 4pm GMT, for clues about fuel demand in the world’s biggest economy.
Data from industry group the American Petroleum Institute, released on Wednesday, showed 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.
