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Brent keeps above $108; on track for biggest weekly gain since July

Jacob Gronholt-Pedersen
Thursday, 14 Nov 2013 | 11:00 PM ET

* Dovish Yellen comments support oil

* U.S. crude weighed by bulging stockpiles

* IEA says market well supplied in short term

SINGAPORE, Nov 15 (Reuters) - Brent oil futures held above $108 a barrel on Friday, heading for its biggest week since early July on expectations the Federal Reserve will stick with its easy money policy for now.

Janet Yellen, likely to be the next Fed chief, on Thursday defended the U.S. central bank's commodity-friendly stimulus measures, suggesting that tapering would not be imminent if she takes up the job.

"The market has turned a little more optimistic about the economy, and most people now think quantitative easing will be continued until next year," said Ken Hasegawa, a commodity sales manager at Newedge in Tokyo.

Brent crude for January delivery was 19 cents higher at $108.47 a barrel at 0350 GMT, and looked set for a weekly gain of more than 3 percent. The December contract, which expired on Thursday, settled $1.42 higher.

U.S. crude was up 38 cents at $94.14.

While the comments from Yellen provided a boost to risk appetite with most commodities and equities scaling higher, U.S. crude stayed on course for its fifth weekly drop in six, weighed by bloating stockpiles.

The contract dipped as low as $92.51 a barrel on Thursday, the lowest since early June, after data from the U.S. Energy Information Administration showed crude inventories rose last week for the eighth straight week.

U.S. crude stocks rose 2.6 million barrels in the week ended Nov. 8, far more than the 1 million barrels analysts surveyed by Reuters had expected.

Brent's premium to U.S. oil futures stood near $13.75 per barrel, after hitting an eight-month high of $15.87 on Thursday.

CALM IN IRAQ

The International Energy Agency said that while oil markets look well supplied in the short term, prices could rise in the next few months due to a seasonal increase in demand and output disruptions in some OPEC producers such as Libya and Iraq.

"The recent easing of prices may be relatively short-lived," the IEA said in its monthly report. "End-user demand is on the verge of a seasonal ramp-up while refinery throughputs look set for a steep rebound in November and December."

Continued unrest in Libya has supported oil prices, with output down to a fraction of production capacity of 1.25 million barrels a day. Protests at oil ports have cost Libya more than $6 billion and started hitting power supplies in the North African country.

In Iraq, the government has moved swiftly to restore calm at its giant southern oilfields following violent protests. Schlumberger Ltd, the world's top oil services company, is expected to return to work next week at Iraq's biggest field, Rumaila.

Dozens of angry Shi'ite Muslim workers and tribesmen stormed the Schlumberger camp in North Rumaila early on Monday, wrecking offices after accusing a foreign security adviser of insulting their religion.

Rumaila pumps about 1.4 million bpd, more than a third of Iraq's total output of over 3 million bpd.

Iraq, OPEC's second biggest oil producer, expects a robust return to growth next year as foreign companies working in its southern oilfields push output towards the highest level ever.

(Editing by Tom Hogue)