UPDATE 6-U.S. oil sinks $1 on Fed tapering fears

Tuesday, 12 Nov 2013 | 12:45 PM ET

* Disruptions to Libyan exports dampen supply prospects

* Conflicting signals from Iran talks add volatility

* Brent/WTI spread widens as U.S. oil stocks seen rising

(Recasts, updates prices, changes dateline, pvs LONDON)

NEW YORK, Nov 12 (Reuters) - U.S. oil futures fell sharply on Tuesday as investors speculated on when the U.S. Federal Reserve will ease up on its monetary stimulus program.

Global equity markets and government debt also dipped as traders awaited afternoon comments from Minneapolis Fed President Narayana Kocherlakota and Atlanta Fed President Dennis Lockhart for clues on the Fed's stimulus, which has supported commodity prices.

U.S. crude for December delivery fell $1 per barrel at $94.14. Brent crude for December delivery gave up 12 cents to trade at $106.34 a barrel at 12:27 (1727 GMT) on Tuesday.

The U.S. benchmark was also pressured by an anticipated build-up in U.S. crude stockpiles, which widened the spread between the two benchmarks to around $12.13 a barrel. <CL-LCO1=R>

Heating oil was higher, reflecting the market's expectation for tight supplies going into winter. The December contract was up more than one percent at $2.8611 per gallon.


Brent oil found some support from disruptions to Libyan oil exports and a lack of agreement between Western nations and Iran over its nuclear program.

Strikes and protests across the country have slashed Libya's oil exports to below 10 percent of its 1.25 million barrels per day (bpd) capacity, boosting oil prices.

Unsuccessful weekend talks over Iran's nuclear program lifted Brent off last week's four-month low on Monday, but investors were waiting for the next round of talks on Nov. 20 for clearer signals as to whether sanctions against Tehran will be relaxed.

The sanctions have buoyed global oil prices by removing more than 1 million bpd of crude from world markets. Any rise in Iranian supply could push oil prices lower, analysts say.

Expectations of rising U.S. crude stockpiles pressured U.S. oil in particular, as a preliminary poll of Reuters analysts forecast a 1.6 million barrel rise in stocks when the U.S. Energy Information Administration publishes its data on Thursday.

Industry group the American Petroleum Institute will release its report on U.S. crude stocks on Wednesday.

On Tuesday, OPEC predicted that demand for its oil in 2014 will average 29.57 million bpd, unchanged from its previous estimate.

(Additional reporting by Alexander Winning in London and Jacob Gronholt-Pedersen in Singapore; Editing by David Holmes and Nick Zieminski)