Brent holds above $108 ahead of Libya ports restart, Fed meet

Brent slipped by more than 2% this week, the steepest weekly loss since late Oct

Brent crude held above $108 a 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 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," said Phillip Futures analyst Tan Chee Tat.

 

January Brent had edged down 14 cents to $108.53 a barrel by 0556 GMT, while U.S. crude futures for January delivery were down 12 cents at $97.38 a barrel.

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 on Thursday, the narrowest in a month.

ANZ analysts said further declines in Brent were curbed by supply chain concerns arising from bombings near the Suez Canal, a major transportation channel for global oil markets.

The Brent-WTI spread could narrow to below $10 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 to pre-protest levels of more than 1 million bpd as internal conflicts continue 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 U.S. Congress may hold off on new sanctions over Iran's nuclear programme, but existing ones remained in place, preventing a rise in oil exports.