Brent Recovers Modestly After Slipping On Fed Taper Expectations
Brent crude oil reached above $106 on Wednesday morning and traded at $106.07 at 7:50 GMT. The commodity recovered slightly after speculation that the Federal Reserve could begin tapering its $85 billion per month stimulus plan in December weighed on oil prices.
CNBC reported that Atlanta's Fed President Dennis Lockhart spoke on Tuesday about the direction the US central bank was headed. Lockhart did not rule out the possibility that the bank could cut down on its stimulus spending at December's policy meeting. The Atlanta Fed President's address coupled with last week's surprisingly positive jobs data has added support to the idea that the Fed could taper in December.
Unsuccessful talks between Western leaders and Iranian officials kept a floor under Brent prices as the commodity is supported by sanctions which have kept much of Iran's oil from the markets. Although the two sides were both positive about the progress that was made at the meeting, no concrete deals have been reached. The two will meet again for further negotiation on November 20.
Supply disruptions in Libya also supported Brent prices as the nation continued to struggle with protests and riots. Most of the nation's largest oil ports have been shut down due to labor protests, which have cut the nation's oil exports to less than half of its normal capacity.
Despite supply threats, the fact remains that markets are generally oversupplied. OPEC released its monthly report on Tuesday, in which the organization said output remains higher than global demand.
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