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Brent Gains Support From Ongoing Libyan Supply Problems

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Brent Gains Support From Ongoing Libyan Supply Problems

Brent crude oil climbed above $110 on Wednesday as Libyan supply issues dragged on. The commodity settled lower on speculation about the Fed taper at $109.34 at 5:20 GMT on Tuesday morning.

CNBC reported that the Libyan government failed to come to an agreement with the nation's tribal leaders, which has prolonged strikes and kept the nation's oil exporting ports shut.

Libyan crude exports have been cut down to less than half of the country's normal capacity since the summer when the protests began. Oil workers, civil servants and tribesmen have reduced the nation's exports to just 110,000 barrels per day.

Related: #PreMarket Primer: Tuesday, December 17: US Markets Rebound Overnight

Many see the chaos in Libya escalating if the issues are not resolved soon, which has added support to Brent prices. However, gains were mitigated by growing speculation that the US Federal Reserve may cut down on its $85 billion per month bond buying plan this week at its December policy meeting. Recent strong labor data coupled with a bipartisan budget deal that could end US budget wars for at least two years have added support to the central bank's case for a taper.

Many see the bank maintaining its current stimulus through the end of the year in order to ensure the nation's recovery is sustainable, but the recent positive data has cast doubt on those predictions. Although there has been an improvement in the labor market and some of the nation's fiscal uncertainty has been removed by the budget deal, the US' inflation figures are still below the Fed's objectives.

Despite recent murmurs about a December taper, most analysts still expect that the bank will wait until early 2014 to cut back.

Posted-In: Federal ReserveNews Commodities Forex Global Pre-Market Outlook Markets Best of Benzinga

 

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