(Reuters) - Brent crude oil rose to around $111 a barrel on Thursday, supported by a drop in U.S. inventories and investor hopes that the Federal Reserve may announce stimulus measures for the U.S. economy on Friday.
Fed chief Ben Bernanke is due to address central bankers at an annual symposium in Jackson Hole, Wyoming, on Friday. His speech last year laid the groundwork for the Fed's $600 billion bond-buying program to revive the U.S. economy.
At 5:02 a.m. EDT, Brent crude was up 75 cents at $110.90 a barrel, while U.S. crude rose 67 cents to $85.83 a barrel. Brent has gained 17 percent this year.
Oil also gained continued support from Wednesday's report from the U.S. government's Energy Information Administration showing crude stockpiles fell 2.21 million barrels. Analysts expected an 800,000-barrel increase.
"The market had expected crude stocks to build but the report showed a drop in stocks," said Singapore-based Victor Shum of energy consulting firm Purvin & Gertz.
Optimism ahead of the Jackson Hole speech also helped boost equities. Gold prices tumbled and the dollar was down almost 0.2 percent against a basket of currencies.
In the Bahamas, energy companies planned to shut more than 28 million barrels of oil storage capacity ahead of Hurricane Irene, while U.S. refineries were preparing for the storm.
NO QE3?
Not all were confident that Bernanke will use his speech to talk about further stimulus.
"During last year's speech, Bernanke prepared the markets for 'QE2,' but we do not think he will unveil anything of the kind this time around," said Edward Meir, analyst at MF Global, in a report.
"The Fed's ability to maneuver at this stage is rather limited and Bernanke knows it, especially after the previous ease yielded mixed results."
As well as the economic outlook, oil investors remain focused on supply-side developments in North Africa and the Middle East.
European Union governments are likely to adopt an embargo against imports of Syrian oil by the end of next week as they move to ratchet up pressure on President Bashar al-Assad, EU diplomats said on Wednesday.
With Libyan rebels hailing the end of Muammar Gaddafi's rule, the oil industry is weighing the implications of a restart of Libyan supplies, which have slowed to a trickle during the conflict.
Libya pumped 1.6 million barrels per day (bpd) before the war, almost 2 percent of world supply. Syria is a much smaller producer with exports of a mere 150,000 bpd.
(Reporting by Seng Li Peng and Alex Lawler; Editing by Alison Birrane)
