SINGAPORE: Brent crude climbed above $106 per barrel on Wednesday, recovering some lost ground after oil was hit by speculation the US Federal Reserve may soon start to reduce its monetary stimulus and expectations of a build-up in US crude stocks.
Appetite for risk assets such as oil fell on Tuesday on worries about reduced liquidity after Atlanta Fed President Dennis Lockhart said a reduction in the Federal Reserve's monthly $85 billion bond purchases remained a possibility at the central bank's next policy meeting on Dec. 17-18.
Brent for December delivery was 25 cents higher at $106.06 per barrel at 0208 GMT, after settling 59 cents lower on Tuesday. US crude was up 15 cents at $93.19 per barrel.
The contract fell more than $2 a barrel on Tuesday, hitting a four-and-a-half-month low. "Traders are just trying to second-guess what the Fed's next move will be," said Ben le Brun, a market analyst at OptionsXpress in Sydney.
"It wouldn't surprise me to see oil prices going a little bit higher, given the falls we've seen, but confirmation of a rebound will not happen until we know what the Fed's intentions are," he said. Nevertheless, expectations of an increase in US crude stockpiles put a lid on gains.
A preliminary poll of Reuters analysts forecast a 1 million barrel rise when the US Energy Information Administration publishes its data on Thursday.
Industry group the American Petroleum Institute will release its report on US crude stocks on Wednesday at 2130 GMT.
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