UPDATE 6-Brent seesaws on Fed nominee comments, Libya unrest

Friday, 15 Nov 2013 | 11:19 AM ET

* Dovish Yellen comments support oil

* U.S. crude weighed down by bulging stockpiles

* IEA says market well supplied in short term

(Recasts, adds details on Pascagoula refinery fire, updates prices, changes dateline, pvs LONDON)

NEW YORK, Nov 15 (Reuters) - Brent oil prices bounced up and down on Friday, still headed for the biggest weekly gain since early July on expectations the U.S. Federal Reserve will stick with its easy money policy for now, and as Libyan civil unrest curbed supplies.

Oil markets were consolidating after absorbing a week's worth of news of Libyan supply outages, negotiations over Iran's nuclear program, and supportive comments from President Barack Obama's nominee to lead the Fed.

Brent prices were choppy on light profit-taking after the contract hit a two-week high of $108.96 in the previous session. Brent crude was up 3 cents at $108.31 a barrel at 11:03 a.m. EST (1603 GMT) and looked set for a weekly gain of 3 percent.

U.S. crude was up 28 cents at $94.04. U.S. crude prices were trying to "develop a little bit of a base," said Tariq Zahir, managing member of commodity fund Tyche Capital Advisors in Laurel Hollow, New York.

"There's nothing out there right now that could sustain higher prices over the long run," he said.

The discount of U.S. Gulf Coast cash gasoline prices to gasoline futures narrowed following news of a fire that caused one death at Chevron's 330,000 barrel-per-day refinery in Pascagoula, Mississippi. There was not much impact on the actual gasoline futures price.

U.S. gasoline futures were last trading a half a percent lower at $2.6691 a gallon.


Janet Yellen, likely to be the next Fed chief, defended the U.S. central bank's commodity-friendly economic stimulus measures, suggesting that any tapering would not be imminent under her watch.

While her comments provided a boost to risk appetite, with most commodities and equities scaling higher, big stockpiles kept U.S. crude in check.

Data from the U.S. Energy Information Administration showed crude inventories in the United States rose by 2.6 million barrels last week, far more than the 1 million barrels analysts surveyed by Reuters had expected.

Brent's premium to U.S. oil futures <CL-LCO1=R> stood at more than $13 per barrel after reaching an eight-month high of $15.87 on Thursday.


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 nations such as Libya and Iraq.

Libyan oil output is down to a fraction of its 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.

"The oil complex remains in a tug of war between the bears who are focused on the growing U.S. crude oil surplus versus the bulls who are focused on the over three million barrels per day of crude oil that remains shut in in various producing countries due to geopolitical events in those countries," said Dominick Chirichella of Energy Management Institute.

Traders were watching negotiations over Iran's nuclear program. Six Western nations are to meet in Geneva next week with the Islamic Republic to discuss a proposed deal under which Tehran would suspend parts of its nuclear program in exchange for limited sanctions relief.

The sanctions have kept some 1 million barrels of oil off the market, and any policy reversal would weigh on prices.

(Reporting by Jeanine Prezioso; Additional reporting by Peg Mackey in London and Jacob Gronholt-Pedersen in Singapore; Editing by Dale Hudson, David Evans and John Wallace)