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UPDATE 6-Brent oil above $107 ahead of U.S. Fed meet outcome
January 29, 2014 / 5:16 AM / 4 years ago

UPDATE 6-Brent oil above $107 ahead of U.S. Fed meet outcome

* Investors await U.S. Federal Reserve meeting result

* U.S. crude inventories rise, distillates fall - EIA

* Iraq says Syria war spillover hinders oilfields, pipelines (Adds U.S. inventory report, updates prices)

LONDON, Jan 29 (Reuters) - Brent crude oil traded above $107 a barrel on Wednesday as investors waited to hear the latest development in U.S. monetary stimulus programme, with prices supported as concerns of turmoil in emerging economies eased.

Asian markets rallied and most other risk assets improved, supporting oil, after Turkey stunned investors with a huge hike in interest rates, stirring hopes the drastic action would short-circuit a vicious cycle of selling in emerging markets and revive risk appetite.

Brent was up by 30 cents to $107.71 per barrel as of 1538 GMT. U.S. oil was down 11 cents to $97.30, after settling at its highest since Dec. 31.

“We still do not anticipate a sustained price rebound for either benchmark, and especially Brent, from here,” said VTB Capital PLC oil strategist Andrey Kryuchenkov.

“Attention is to turn to the broader market later tonight, as the U.S. Federal Reserve releases its January policy statement.”

Brent has declined 3 percent this month following three straight months of gains. U.S. oil has lost 1.3 percent this month, but that follows a steep gain of 6 percent in December, the largest since July.

The price difference between the two contracts CL-LCO1=R held above $10 a barrel.

Financial markets are waiting for the result of a meeting of the U.S. Federal Reserve, due to finish on Wednesday, where the central bank is widely expected to trim its monetary stimulus by another $10 billion per month.

“Oil markets continue to oscillate between quantitative easing tapering, emerging market concerns, and physical supply/demand,” analysts at ANZ Bank said in a note.

Inventory data from the U.S. Energy Information Administration (EIA) announced at 1530 GMT showed a large increase in U.S. crude stocks.

Crude inventories rose by 6.4 million barrels, the EIA reported, more than the 2.3 million-barrel increase expected, and more than the 4.7 million-barrel increase reported by industry group the American Petroleum Institute on Tuesday.

Further support for oil is coming from supply concerns from the Middle East.

Spillover attacks from the civil war in Syria have hindered development of Iraq’s gas and oil reserves and a major pipeline to the Mediterranean has been blown up dozens of times, Iraq’s top energy official said on Tuesday. (Additional reporting by Christopher Johnson and Alex Lawler in London and Manash Goswami in Singapore; editing by Keiron Henderson and Jason Neely)

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