* Brent/WTI spread widens to $12 in heavy selling
* Fed tapering expectations pushed to 2014 after payrolls
* Coming up: EIA oil inventory data at 1430 GMT
By Jessica Jaganathan
SINGAPORE, Oct 23 Brent crude slipped below $110
a barrel on Wednesday after disappointing U.S. jobs data and a
build in crude stockpiles raised concerns about oil demand in
the world's largest oil consumer.
The onset of seasonal U.S. refinery maintenance, coupled
with pipeline outages, has swollen domestic stockpiles and
stretched the Brent-WTI oil spread to its widest since April.
But oil price losses were capped by a weak dollar as the
disappointing payroll data raised hopes the U.S. Federal Reserve
would stick to its economic stimulus this year.
Brent crude oil futures slipped 24 cents to $109.73
a barrel by 0627 GMT, after earlier hitting a session-high of
U.S. crude oil futures for December delivery fell 51
cents to $97.79. The November futures, the previous front-month
contract, expired on Tuesday after hitting a low of $97.50, its
weakest since July 1.
The Brent/WTI spread broadened to $12, its
biggest gap since mid-April.
"WTI prices are largely dictated by the amount of supply in
the U.S. at the moment, which is why WTI really underperformed
Brent overnight," said Ben Le Brun, a market analyst at
OptionsXpress in Sydney.
Traders will look now for further economic and oil data to
indicate what the Fed might do about its stimulus programme, he
"Markets have priced in a tapering story maybe pushed out
into 2014 ... So now, we're probably looking for economic data
coming out in the next 24 hours to dictate prices."
Data from the American Petroleum Institute showing crude
stocks building at Cushing, Oklahoma, after 14 weeks of decline
helped to trigger selling of U.S. crude.
Investors are waiting for the latest weekly report from the
U.S. Energy Information Administration (EIA), which will return
to its normal schedule this week after the U.S. government
resumed operations after its shutdown.
U.S. crude prices were also under pressure with a rise in
output from major shale oil plays, according to an EIA report.
FED RESERVE MONETARY EASING
Brent found support early in the session from the belated
release of U.S. jobs data showing nonfarm payrolls increased by
148,000 workers in September, less than expected.
The dollar eased and the traders initially focused on the
likelihood of more protracted Fed support, as the report
suggested the economy was losing momentum even before the U.S.
fiscal standoff that partially shut down the government for more
than two weeks.
"There is also likely to be added volatility over the next
few months, given hiring by some firms was likely to be delayed
due to the fiscal uncertainty," ANZ analysts wrote in a note on
Wednesday. "In such an environment the Fed is likely to keep the
foot firmly on the gas pedal with tapering a 2014 story."
The U.S. dollar wallowed near a two-year low against the
euro on Wednesday, making oil and other commodities priced in
the greenback cheaper for holders of other currencies.
Tenuous relations between the United States and Saudi
Arabia, the most important oil producer in the Middle East, also
supported a geopolitical risk premium in Brent.
Saudi Arabia's intelligence chief is vowing that the kingdom
will make a "major shift" in relations with the United States to
protest perceived American inaction over Syria's civil war as
well as recent U.S. overtures to Iran, a source close to Saudi
policy said on Tuesday.
Holding any Brent gains in check, Libya's oil production is
stable at around 600,000 barrels per day (bpd), where it has
been for about a month, as the government works to end protests
at fields and ports that have cut shipments for months, the
National Oil Corp. (NOC) said.