UPDATE 1-Oil slips below $109 on Libyan export hopes; Fed in focus

Wednesday, 30 Oct 2013 | 1:43 AM ET

* Fears about Libyan oil export disruption fade

* Higher-than-expected American crude build weighs on futures

* Investors waiting for outcome of Fed policy meeting

(Adds graphics, U.S. dollar rise, updates prices)

TOKYO, Oct 30 (Reuters) - Brent crude edged below $109 on Wednesday as worries about disruption to petroleum exports by OPEC member Libya eased a little, while a bigger-than-expected increase in inventories weighed on U.S. oil futures.

Traders were looking ahead to comments from a U.S. Federal Reserve policy meeting that ends later in the day, but any impact on oil prices may be muted, with the U.S. central bank widely expected to maintain its massive economic stimulus programme.

London Brent crude for December delivery was down 19 cents at $108.82 a barrel at 0539 GMT, after settling down 60 cents on Tuesday. U.S. crude for December delivery was 45 cents lower at $97.75.

A mixed bag of U.S. economic data over the last few days has reinforced expectations the U.S. central bank will not reduce its $85 billion of monthly asset purchases until March at the earliest.

"If (the Fed) acts as expected and there is no change in their position, it will likely support oil prices, but not cause them to be pushed up significantly," said Tetsu Emori, a commodities fund manager at Astmax Investments.

The U.S. dollar hit a one-week high as investors judged that the prospect of easy money for longer had now been pretty much discounted.

Libya's crude oil exports have slumped to around 90,000 barrels per day, less than 10 percent of capacity, as protests have halted operations at ports and fields, but Libya's prime minister said on Monday exports from the eastern port of Hariga with a capacity of 110,000 bpd would resume after one week.

Weighing on U.S. futures, U.S. crude inventories rose by 5.9 million barrels in the week to Oct. 25, compared with analysts' expectations of an increase of 2.2 million, statistics from the American Petroleum Institute showed on Tuesday.

The U.S. Energy Information Administration will release its own oil inventories statistics later on Wednesday.

"If we don't have any changes to (the uncertainty in) Libya or the tapering, I think just seasonally as we go into winter, runs will ramp up steeply in the United States, and these crude builds we're seeing now will start to draw down," said Tony Nunan, a risk manager at Mitsubishi Corp.

"So we could possibly see WTI go back up over $100 and Brent stay supported at $108," Nunan added.

Investors will also keep an eye on a series of technical and diplomatic meetings on Iran's nuclear programme that could pave the way for an easing of sanctions on Iranian crude exports.

But any increase in exports from the Islamic state may take some time as the U.S. Senate is debating fresh sanctions aimed at slashing Iran's oil sales in half within a year of the plan being signed into law, an influential senator said.

(Reporting by James Topham; Editing by Muralikumar Anantharaman and Alan Raybould)