Brent crude oil held above $112 on Friday morning as new developments in the Middle East renewed worries about a supply interruption but easing tension in Syria pressured prices. The commodity traded at $112.08 at 8:00 GMT on Friday.
US Secretary of State John Kerry and Russian Foreign Affairs Minister Sergey Lavrov began a second day of meetings where they ironed out details of a non violent solution to the crisis in Syria. Although US military action is highly unlikely at this point, disagreements between the US and Russia over whether or not to include a threat of military action if Syria does not comply could hinder progress.
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CNBC reported that Brent also found support from reports that Libya's National Oil Corp. suspended its contractual obligations for oil delivery at three of its major ports. Tension in the African nation over labor issues has closed most of its major export terminals and reduced its export capacity by more than 50 percent.
Brent could face some pressure as the US Federal Reserve policy meeting approaches since most are betting that the bank will announce the beginning of its tapering plan. Despite recent weak jobs data from the US, most are expecting that the Fed will cut its $85 billion per month bond buying plan by at least $10 billion at the policy meeting next week. The cutback will likely lend strength to the dollar and drive crude prices down.
Moving forward, investors will be watching for a host of US data out today for clues about the nation's ability to stand on its own without the bank's stimulus. Retail sales data and producer inflation data are both expected to have a large effect on markets as investors look for indications about the Fed's stimulus strategy.
