REPUBLIKA.CO.ID, SINGAPORE - Brent crude held above 108 USD per barrel on Friday as traders eyed a restart of ports in eastern Libya while also looking ahead to next week's Federal Reserve meeting for any changes to its massive stimulus programme.
Upbeat economic data from the United States has heightened speculation that the Fed might start trimming its bond purchases as early as next week, a move that could strengthen the greenback and weigh on demand for dollar-denominated commodities such as oil. But stronger data could also lead to higher fuel demand growth at the world's largest oil consumer.
"The prospect for WTI is better than Brent," Phillip Futures analyst Tan Chee Tat said.
January Brent crude had edged up 10 cents to 108.77 USD per barrel by 03.17 GMT, while US crude futures for January delivery were at 97.52 USD per barrel, up 2 cents.
Brent slipped by more than 2 percent this week, the steepest weekly loss since late October, and its premium to West Texas Intermediate (WTI) closed at 11.06 USD on Thursday, the narrowest in a month. The Brent-WTI spread could narrow to below 10 USD by mid-January when pipelines start draining crude from WTI delivery point Cushing in Oklahoma, Phillip Futures' Tan said.
Shell's Houston-to-Houma pipeline and TransCanada's southern leg of the Keystone XL will start operations over the next few weeks, while the Seaway Twin, to move crude from Cushing to Texas, is expected to start in the second quarter of 2014.
In Libya, the government is set to reopen three eastern ports on Sunday that could increase exports from the OPEC producer from the current 250,000 barrels per day (bpd). Analysts were doubtful as to whether Libya could raise its output back to pre-protest levels of more than 1 million bpd as internal conflicts continued to threaten the nation's oil industry.
Traders are also watching the progress of nuclear talks between major powers and Iran which could lift sanctions on the OPEC producer's oil exports and increase global supply. The US Congress may hold off on new sanctions over Iran's nuclear programme, but existing ones remained in place, preventing a rise in oil exports.
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