Reduced crude stockpiles in US, uncertainty over Libyan conflict also supports sentiment
Brent crude prices steadied above $109 on Wednesday as
investors pinned their hopes on the US Federal Reserve to inject fresh stimulus
measures to boost the world's largest economy.
Markets are betting that Fed Chairman Ben Bernanke could use
his address later this week at a policymakers gathering in Jackson Hole,
Wyoming, to signal more quantitative easing measures that could translate to
Reduced crude stockpiles in the US, uncertainty over when
the conflict in Libya will end and a force majeure by Royal Dutch Shell on
Bonny Light sweet crude were also supporting sentiment.
"The oil market is trending higher, and you see this in
the equities market as well, but it's purely based on the prospects of a
QE2," Jonathan Barratt, managing director at Commodity Broking Services in
"Hopefully they do come up with a QE3 of some sort. But
will this be just a short term gain? We have already seen a lot of pain. We still
have economic concerns and prospects of a double dip."
Brent crude was about 18 cents higher at $109.49 a barrel as
of 0403 GMT, while US October crude was 27 cents higher at $85.71 a barrel.
Asian stocks fell on Wednesday as a rally fuelled by speculation
about the Fed ran out of steam, after a 3 percent jump in US stocks on Tuesday.
Shell said on Tuesday it has been forced to shut in its
Nigerian Bonny Light crude exports to repair pipeline damage caused by a recent
spate of hacksaw attacks.
Traders said Nigeria's total exports would fall from a
planned volume of about 2 million bpd in September and 1.85 million bpd in
US crude inventories fell 3.3 million barrels in the week to
August 19, against analyst forecasts for an 800,000-barrel rise.
The Energy Information Administration (EIA) will issue its
own weekly data on Wednesday at 10:30 am EDT (1430 GMT).
In Libya, rebels sacked Muammar Gaddafi's Tripoli bastion,
seizing weapons and smashing symbols of a 42-year dictatorship.
Gaddafi said on Wednesday his withdrawal from his Bab Al Aziziya
headquarters was a "tactical move" after the compound was levelled by
64 NATO air strikes.
Forces loyal to Gaddafi were shelling the towns of Zuara and
Ajelat west of Tripoli, Al Arabiya television reported.
In Tripoli, correspondents said there still appeared to be
some hostile fire around the city centre as darkness descended and looting
Libya's former top oil official Shokri Ghamen had said on
Monday that it would take as long as 18 months for Libya's oil flow to reach
the pre-war of around 1.6 million barrels per day (bpd), nearly 2 percent of
"I actually feel that you are going to get more of an
uptake in Libya's production. The production of the light sweet on the European
market will come a lot sooner than what people expect," said Barratt, who
estimated that Libya could be currently producing 180,000-200,000 bpd.