Brent holds near $110 on hopes of delay in US Fed tapering

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Brent crude oil futures held steady near $110 a barrel on Monday on hopes the U.S. Federal Reserve would delay curbing its massive economic stimulus programme until next year, which could help support oil demand in the world's largest oil consumer.

Investors were also waiting for the release of U.S. government oil data later in the day and U.S. September payrolls data on Tuesday for further clues on the country's oil demand.

Brent crude futures for December delivery edged higher by 1 cent to $109.95 a barrel by 0501 GMT. Last week, the contract lost 1.2 percent, its first weekly loss in three.

U.S. crude oil futures for November delivery slipped 5 cents to $100.76, after earlier rising as high as $100.95.

"The market's just in a wait-and-see mode ... The thing on most traders' minds is what sort of story is going to be told by the U.S. data now that it's going to be released again," said Ric Spooner, chief market analyst at CMC Markets in Sydney.

Investors face a deluge of data this week as U.S. government departments catch up after a 16-day shutdown.

The U.S. Energy Information Administration will release weekly oil data for the week ended Oct. 11 later on Monday. Its normal release schedule will resume after that, and oil data for last week will be released on Wednesday.

"We had the U.S. government shutdown after most of the data we're about to see, so even if it looks okay, people will be factoring in the slowdown from the shutdown," Spooner said.

"If the data is weaker than expected then that would be looked at as significant as it gives us a lower base running into the government shutdown."

Oil prices were supported by a weaker U.S. dollar, which fell to its lowest level since February on Friday on expectations the Fed will have to delay scaling back its stimulus following the U.S. government shutdown.

A weak dollar boosts oil and other commodities priced in the greenback by making them cheaper for holders of other currencies.

"Rather than displaying euphoria at a resolution, the general mood appears to reflect belief that the U.S. data hole - as well as possible real damage to the U.S. economy from the recent fiscal impasse - is likely to impose a delay on the Federal Reserve's plans to taper its third round of quantitative easing," said ANZ analysts in a note on Monday commenting on the congressional deal to reopen the U.S. government.

Oil prices were also supported after data showing that oil demand in the U.S. rose 2.7 percent in September compared with year-ago levels due to the stronger economy and export demand, according to American Petroleum Institute data.

This follows positive economic data from China, the world's second largest oil consumer, where gross domestic product grew 7.8 percent in the third quarter from a year earlier.

Saudi Arabia increased its oil exports by 325,000 barrels a day (bpd) in August from July to 7.795 million bpd, the latest official data published by the Joint Data Initiative (JODI) showed on Sunday.

The world's largest oil exporter produced 10.19 million bpd of crude, up 156,000 bpd from July.

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