* U.S. crude stocks drop 2.5 mln bbls, gasoline, distillates
also fall - API
* U.N. told up to 500 killed in South Sudan clashes
* Dollar on defensive as US Fed verdict on stimulus looms
* Coming Up: Federal Reserve Chairman's briefing; 1930 GMT
By Manash Goswami
SINGAPORE, Dec 18 Brent futures held steady
above $108 a barrel on Wednesday after their previous day's
slide, with investors reluctant to lock in positions ahead of a
U.S. Fed briefing that is expected to shed light on a plan to
taper its monetary stimulus.
Chairman Ben Bernanke is expected to give details later in
the day on when the Fed may start to reduce its $85
billion-a-month bond-buying programme, a major factor that has
underpinned riskier global assets including commodities and
restrained the dollar in recent years. Oil, particularly the
U.S. benchmark, also drew support from a likely fall in U.S.
Brent crude gained 9 cents to $108.53 a barrel by
0340 GMT, after settling nearly $1 lower. U.S. oil rose
14 cents to $97.36, after ending 26 cents lower.
"In less than 12 hours, we will know about the definitive
action the Fed plans to take on its easing programme. Oil and a
lot of other markets will take their cues from the comments,"
said Ben Le Brun, a market analyst at OptionsXpress in Sydney.
"Nobody is on the front foot or the back foot at the moment."
Although a steady run of firm U.S. economic data in recent
weeks has raised speculation the Fed could reduce its bond
buying at its policy meeting ending later in the day, a majority
of investors still think any tapering will happen next year.
Apart from oil, Asian shares and gold held firm on
Wednesday, while the dollar weakened.
"My personal view is that we may get some form guidance on
when the Fed may start to taper its stimulus," Le Brun said.
"There is nothing to make the Fed rush at the moment. They are
likely to play it very, very safe."
Oil is also drawing support from demand growth hopes at the
world's largest oil consumer after industry data showed a fall
in crude stockpiles.
US CRUDE STOCKS
Crude inventories fell by 2.5 million barrels in the week to
Dec. 13 to 367.8 million barrels, data from industry group the
American Petroleum Institute showed, compared with analysts'
expectations for a decrease of 2.3 million barrels.
Gasoline stocks also fell by 481,000 barrels, compared with
expectations for a 1.9 million barrels gain. Distillate fuels
stockpiles, which include diesel and heating oil, fell by
434,000 barrels versus expectations for a 400,000-barrel gain,
the data showed.
Investors are now awaiting data from the U.S. Energy
Information Administration (EIA) to get a clearer picture of the
country's demand outlook.
Oil also drew support from worries over tighter supplies due
a prolonged outage at Libya.
Investors worry Libya will slide into chaos as the Tripoli
government struggles to rein in militias and tribesmen who
helped topple Muammar Gaddafi in 2011 but kept their weapons and
control parts of the OPEC-member country. The unrest has cut
vital oil exports to 110,000 barrels per day (bpd) from more
than 1 million bpd in July.
(Editing by Muralikumar Anantharaman)