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Brent crude steady near $110, lower stocks support

Published 08/25/2011, 12:08 AM
Updated 08/25/2011, 12:12 AM

* Drawdown on U.S. crude stocks supports market

* Positive U.S. manufacturing data gives rosier view

* Market awaits speech by Fed chairman Bernanke

* Coming Up: U.S. initial jobless claims; 1230 GMT

By Seng Li Peng

SINGAPORE, Aug 25 (Reuters) - Brent crude steadied around $110 a barrel on Thursday, supported by reduced U.S. crude stocks and positive manufacturing data, countered by economic growth uncertainties.

A speech on Friday by Federal Reserve Chairman Ben Bernanke looks set to be the main event of the week for all markets, as investors wait to see if he will talk about more stimulus for the faltering U.S. economy.

U.S. crude stockpiles fell 2.21 million barrels to 351.77 million barrels in the week to Aug. 19, data from the Energy Information Administration showed, against a forecast for an 800,000 barrel build.

As 0312 GMT, Brent crude was up 10 cents at $110.25 a barrel, while U.S. crude was down 6 cents to $85.10 a barrel.

The WTI-Brent crude spread were slightly above $25.00

"The market had expected crude stocks to build but the report showed a drop in stocks," said Singapore-based Victor Shum of energy consulting firm Purvin & Gertz.

"That surprised the market, even though, directionally the results from the DOE for crude were consistent with the earlier API report."

Positive U.S. economic data in the form of a 4 percent jump in durable goods orders in July bolstered sentiment. The rise was double economists' expectations.

Durable goods are for items from toasters to aircraft meant to last three years or more.

Reuters' market analyst for commodities and energy technicals Wang Tao said that U.S. oil is technically neutral in a range of $84.55-$86.39 per barrel.

UNCERTAINTIES PERSIST

Investors' confidence that Bernanke will use his Jackson Hole, Wyoming speech to talk about further stimulus seemed to be wavering.

"There was some earlier euphoria about Bernanke announcing some quantitative easing measures, but in my opinion that is more wishful thinking," said Shum.

"Bernanke will likely say something supportive, but likely there won't be much clarity on it."

The oil market also continues to be buffeted by developments in North Africa and the Middle East.

European Union governments are likely to adopt an embargo against imports of Syrian oil by the end of next week, as they move to ratchet up pressure on President Bashar al-Assad, EU diplomats said on Wednesday.

The EU already has sanctions against dozens of Syrian officials and several state entities but it has taken incremental steps in broadening its measures, with some states concerned about risking commercial interests in Syria.

The situation in Libya remains tense, with Muammar Gaddafi nowhere to be found.

What will be critical for oil markets is how quickly the country's production can return to pre-conflict levels of around 1.6 million barrels per day.

Rebel authorities on Wednesday called on oil workers to return to the Ras Lanuf and Brega oil terminals in the east of the country, which they gained control of earlier this week. (Editing by Michael Urquhart)

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