Oil above $110 as eyes turn to US Fed

Oil prices rose by more than 1 per cent on Wednesday to above $110 a barrel, after weekly data showed a surprise fall in crude oil stockpiles in the United States, but gains were tempered by caution over the strength of demand. At 11:51 am EDT (1552 GMT), Brent crude was up $1.21 at $110.52 a barrel while US crude was up 48 cents at $85.92 a barrel.The US Energy Information Administration (EIA) said crude stocks in the world’s largest oil consumer fell by a surprise 2.2 million barrels last week, against analyst forecasts for a 800,000 barrel rise. Both gasoline and distillate stocks rose, however, which limited gains in crude prices.  Prices drew support from the still-uncertain outlook for Libyan exports and a force majeure declared on Tuesday by Royal Dutch Shell on some supplies of Nigerian sweet crude.Financial markets are waiting for a speech from US Federal Reserve Chairman Ben Bernanke on Friday, to see if the central bank chief signals further monetary easing to stimulate a sluggish US economy. “The market’s not taking off, and I think it’s going to be real hard for us to put on any big positions anywhere when we have this big looming meeting” of central bankers in Jackson Hole, Wyoming, said Richard Ilczyszyn, senior market strategist at MF Global in Chicago. “If we do get something perceived as positive, and equities fly up, you could see US crude run back up to the $90 price band.” Energy Information Administration (EIA) data showed crude stocks fell a surprise 2.21 million barrels, against analyst forecasts for an 800,000-barrel rise. The report was in line with Tuesday’s API data showing a 3.3 million barrel draw in the week to Aug. 19.    “The crude draw is a big number,” said Carl Larry, director of energy derivatives and research at brokerage Blue Ocean in New York. “We continue to draw and those numbers might only even out as we head into turnarounds. Demand is still pretty solid from an overall perspective.”  The outlook for Libya is still uncertain, where worries remain about internal divisions within the opposition in the post-Gaddafi era, potentially sparking a new period of instability and further hampering oil exports. From / Gulf Today