Brent steady above US$107

SINGAPORE: Brent futures held steady above US$107 per barrel on Thursday, as investors balanced dovish Federal Reserve comments with expectations of a rise in US crude inventories.

In prepared comments to be delivered to a Senate committee hearing later on Thursday, Janet Yellen, who is poised to be the next head of the Fed, said she thought the US central bank had more work to do to aid the economy.

"Commodities, including oil, will be very sensitive to any clues about when the tapering will take place," said Mark Keenan, head of commodities research in Asia at Societe Generale. He was referring to the timing of any tapering in the Fed's massive bond-buying programme.

Brent for December delivery was up 26 cents at US$107.38 per barrel at 0747 GMT. The contract closed US$1.31 higher on Wednesday, supported by Libyan supply outages.

US crude was 7 cents lower at US$93.81 per barrel, after settling up 84 cents.

The Fed's US$85-billion-a-month in bond-buying has boosted liquidity and appetite for risk assets such as oil, with Yellen's comments also supporting equities and curbing the dollar.

"The market will be pretty focused on the tone of her address. Hopefully she'll provide some reasonable clarity, so the market can return to supply and demand dynamics," said Keenan.

Yellen is due to speak in a Senate hearing at 1500 GMT.

Investors will also pay close attention to the weekly inventory report from the US Energy Information Administration, due at 1600 GMT, for clues about fuel demand in the world's biggest economy.

Data from industry group the American Petroleum Institute, released after the Wednesday session's close, showed that US
crude stocks rose by 599,000 barrels overall last week, with an increase of 1.7 million barrels at the Cushing, Oklahoma delivery hub.

A Reuters survey showed EIA crude inventories were expected to rise by nearly 1 million barrels.

Expectations of an improvement in profits from processing a barrel of crude into products in the United States could encourage refiners to ramp up runs when they return from seasonal maintenance, driving up demand for crude, analysts at Phillip Futures said in a note to clients.

US regional refining margins rose 2.68 per cent on average in the week that ended November 8, Credit Suisse said in a weekly report on Monday.

Also supporting oil prices were comments from Israeli Prime Minister Benjamin Netanyahu on Wednesday warning that a "bad deal" with Iran on its nuclear programme could lead to war.

Sanctions against Iran have removed about 1 million barrels a day from global oil markets, but recent high-level talks with the United States and other world powers have raised optimism that sanctions could be eased. A new round of negotiations is scheduled for next week.

Outages in Libya helped push Brent higher on Wednesday with the head of Italian oil and gas group Eni saying the situation was getting worse. Output from the OPEC member has remained a fraction of its pre-war level of 1.6 million barrels per day due to prolonged protests.

"Brent oil was also supported by demonstrations in Libya that prevented a tanker from loading," Phillip Futures said.

Investors will also be keeping an eye on preliminary euro zone GDP figures at 1000 GMT for signs of recovery that mean stronger oil demand