Crude Falls Before Fed Meet But Holds Above $98 On Libya

Crude oil fell from the highest level in a week as the US Federal Reserve starts a 2-day meeting today to consider whether to start trimming its monetary stimulus while Goldman Sachs cut its 2013 estimate for oil production from OPEC citing supply constraints in Libya.

The Federal Reserve is widely expected to maintain its current level of economic stimulus as it awaits more evidence of how bad Washington`s recent budget battle and government shutdown has hurt the US economy.

Monday’s data showed that the US manufacturing output barely rose in September while contracts to buy previously owned homes recorded their largest drop in nearly 3-1/2 years, pushing the US dollar higher, which added downside pressures on oil prices.

- WTI crude oil futures for December is trading around $98.34 a barrel after falling $0.34

- Brent futures for December settlement is trading around $108.96 a barrel after falling $0.64

Libya’s crude production was cut by half amid protests; the country holds Africa’s largest oil reserves. Output will resume over the next 24 hours, Libya News Agency said today, citing Oil Minister Abdulbari Al-Arusi.

Adding to the downside pressures on oil prices is the expected rise in US crude inventories to the most in four months in the world’s biggest oil consumer before tomorrow’s EIA report. The American Petroleum Institute is scheduled to release separate data today.

Investors will also keep an eye on talks between Iran and six world powers on October 30-31 preparing for the next high-level talks over the nuclear program. Iran is planning to offer international companies more lucrative contracts in its oilfields over the next 3 years.

- Natural gas is trading at $3.567 per cubic feet after falling 0.06%

- Gasoline is trading at $2.624 per cubic feet after falling 0.26%

- Heating oil (diesel) is trading at $2.9525 a gallon after falling 0.40%