Brent crude edged above $106 (RM340) per barrel today, recovering some lost ground after oil was hit by speculation the US Federal Reserve may soon start to reduce its monetary stimulus. Appetite for risk assets such as oil fell yesterday on worries about reduced liquidity after Atlanta Fed President Dennis Lockhart said a reduction in the Federal Reserve's monthly $85 billion (RM272 billion) in bond purchases remained a possibility at the bank's next policy meeting in mid-December. Expectations of a build in US crude stocks have also been weighing on prices. Brent for December delivery was 26 cents (RM0.83) higher at $106.07 (RM340.22) per barrel at 0539 GMT (1:39pm MYT), after settling 59 cents (RM1.89) lower yesterday. US crude was up 9 cents (RM2.89) at $93.13 (RM298.71) per barrel. The contract fell more than $2 (RM6.42) a barrel yesterday, hitting a four-and-a-half-month low. "Traders are just trying to second-guess what the Fed's next move will be," said Ben Le Brun, a market analyst at OptionsXpress in Sydney. "It wouldn't surprise me to see oil prices going a little bit higher, given the falls we've seen, but confirmation of a rebound will not happen until we know what the Fed's intentions are," he said. Expectations of a gain in US crude stocks capped gains. A preliminary poll of Reuters analysts forecast a 1-million-barrel rise for last week when the US Energy Information Administration publishes its data on Thursday. Industry group the American Petroleum Institute will release its report on US oil stocks on Wednesday at 2130 GMT (5:30am MYT). Output from the Organization of the Petroleum Exporting Countries remains higher than next year's global requirement for its crude, the group said in its monthly report yesterday, even after Saudi Arabia cut production from a record high level in October. OPEC forecast demand for its oil in 2014 would average 29.57 million barrels per day (bpd), unchanged from its previous estimate. The oil cartel pumped 29.89 million bpd in October, according to secondary sources cited by the report. Lack of success at weekend talks on Iran's nuclear programme lifted Brent off last week's four-month low, with little optimism that more than 1 million bpd of Iranian barrels will return to oil markets soon. That's about what has been reduced from Iran's pre-2012 export levels. "It does not appear to us that a breakthrough will emerge soon and that continuing lost Iranian barrels will remain a supportive factor to oil prices," BNP Paribas head of commodity markets Harry Tchilinguirian said in a note to clients. Investors will await for the next round of talks on Nov. 20 for clearer signals as to whether sanctions against Tehran will be relaxed. Supply from Libya also looked unlikely to return to normal as the government struggles to cope with protesters who have taken over eastern oil ports and a western terminal. Protesters demanding more rights or better conditions blocked the front gate of the Zawiya refinery and oil port yesterday, but production continued at the 120,000 barrel-per-day plant. In China, leaders said markets would play a decisive role in the economy under reforms to be pushed through by 2020, although the statement issued at the end of the Communist Party's four-day meeting yesterday was short on details. - Reuters, November 13, 2013.

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