* Bernanke says Fed stimulus benefits clear, downplays risks
* Asian shares, base metals rise after Fed reassures on
* U.S. crude oil inventories rise, refined products fall
* Coming Up: EIA petroleum status report; 1530 GMT
By Manash Goswami
SINGAPORE, Feb 27 Brent futures held near $113 a
barrel on Wednesday after the U.S. Federal Reserve's affirmation
of its commitment to monetary stimulus renewed hopes of a
revival in demand growth in the world's biggest oil consumer.
Chairman Ben Bernanke's strong defence of the Fed's
bond-buying stimulus before Congress and a spike in U.S. home
sales boosted Asian shares, base metals and other riskier
assets. Concerns over spending cuts in the United States and
prolonged instability in Europe as elections in Italy failed to
produce a strong government kept a lid on prices.
Brent crude gained 38 cents to $113.09 a barrel by
0733 GMT, after rising to as much as $113.14. The contract hit a
session low of $112.41 a barrel on Tuesday, its weakest since
Jan. 24, and settled down $1.73.
U.S. oil gained 27 cents to $92.90, after ending 48
cents lower on Tuesday.
"We did get some positive statements from the United States
overnight," said Ric Spooner, chief market analyst at CMC
Markets. "But as we get close to the end of the month, there is
uncertainty over the spending cuts and there are concerns over
Europe's growth. All these factors will weigh on oil prices."
Bernanke said Fed policymakers are cognizant of potential
risks from their extraordinary support for the economy,
including the possibility it might fuel unwanted inflation or
stoke asset bubbles. But the risks did not seem material at the
moment, he said, adding the central bank has all the tools it
needs to retreat from its monetary support.
Markets were also buoyed by data showing U.S. home prices
closed out 2012 with the biggest annual gain in more than six
years, while sales of new homes spiked in January, the latest
sign that the long-suffering housing market was on the mend.
"Potentially further losses in U.S. crude prices were pared
back following better-than-expected U.S. data towards the end of
the session," analysts at ANZ said in a report.
After Bernanke's testimony, investor attention is shifting
back to the impending spending cuts in the United States as
Republicans and the White House have failed so far to reach an
Republicans want to replace the across-the-board sequester
cuts by finding other more-targeted spending reductions.
Congressional Democrats have put forward a $110 billion plan
that includes not only spending cuts but also tax increases,
which are opposed by Republicans.
Bernanke urged lawmakers to avoid sharp spending cuts set to
take effect on Friday, warning that they could combine with
earlier tax increases to create a "significant headwind" for the
modest economic recovery.
"Even if there is no agreement, the U.S. can probably wing
it for another month or so without any material damage," Spooner
said. "But the end result will be further fiscal tightening and
that will be potentially negative for the United States."
In Europe, a political stalemate in Italy could halt reforms
needed to spur growth and help the country cut its massive 2
trillion euro debt pile. Italy is facing a political crisis as
the vote cast over the weekend gave none of the political
parties a parliamentary majority.
A bearish target at $111.97 remains unchanged for Brent as
indicated by its wave pattern and a Fibonacci ratio analysis,
according to Reuters technical analyst Wang Tao. A bearish
target of $91.15 is also unchanged for U.S. oil.
Oil, particularly the U.S. contract, drew some support as
American Petroleum Institute data showed U.S. crude stockpiles
rose less than expected. Stocks rose 904,000 barrels in the week
to Feb. 22, the data showed, while analysts had expected a rise
of 2.4 million barrels. Official data from the Energy
Information Administration (EIA) is due later in the day.
Investors are also awaiting the outcome of talks between
world powers and Iran over Tehran's controversial nuclear
programme. Concerns over a supply disruption from the Middle
East have kept Brent over $100 for most of 2012 and this year.
"So far there is no particular rapprochement. There is an
impression that the atmosphere (at talks) is not very good,"
Russian news agency Interfax quoted a source close to the talks
as saying on Wednesday.
(Editing by Himani Sarkar and Tom Hogue)