Brent inches down; eyes stockpiles, EU meeting

LONDON: Brent crude futures edged lower on Wednesday, paring back earlier gains, amid worries that Europe may fail to deliver a firm solution to its burgeoning sovereign debt crisis.

Brent crude futures, which have lagged the US crude rally of 6.5 percent in the last three sessions, were 43 cents lower at $110.49 a barrel by 0845 GMT.

US crude was flat by the same time at $93.17 a barrel, after posting gains yesterday of around 1.6 percent.

Brent's premium to US crude rose to $17.35 after it closed on Tuesday at $17.75, the narrowest settle since early July and coming in sharply from a record of about $28 a barrel on Oct. 14.

Investors remain cautious ahead of the meeting of euro zone heads of state due at 1730 GMT after EU officials said there is little likelihood of concrete details or numbers being agreed.

"European economic uncertainty is keeping a lid on prices but the resurgence in Chinese demand stops markets falling too far," said Jefferies Bache oil broker Christopher Bellew.

European Union finance ministers cancelled a meeting set for Wednesday but a summit of EU leaders and euro zone leaders will proceed as normal, an EU spokesman said on Tuesday.

But the prospects for a comprehensive deal to resolve the euro zone debt crisis look dim, with deep disagreement remaining on critical aspects of the potential agreement, including how to give the region's bailout fund greater firepower.

"There's been a lot of hope that the euro zone would get their act together. But maybe that was a little bit overdone on the upside and a little over optimistic," said Tokyo-based risk manager Tony Nunan of Mitsubishi Corp.

US INVENTORIES

Eyes are on the US Energy Information Agency's weekly oil stockpiles data due at 1430 GMT, which according to a Reuters poll should show an increase as imports rebounded from a steep drop in the previous week.

Stockpiles of crude are expected to have risen 1.3 million barrels for the week ended Oct 21.

According to data from industry group American Petroleum Institute late on Tuesday, US crude oil stocks rose 2.7 million barrels last week, more than double the 1.3 million barrel build forecast by the Reuters poll.

But total US oil inventories have tightened and are approximately 8 percent lower than the same time last year at 332.9 million barrels, according to the EIA.

The Midwest crude surplus is subsiding, at least temporarily, with stocks at Cushing, Oklahoma -- delivery point for WTI -- plunging by more than a quarter since hitting a 42 million barrel high this spring.

Copyright Reuters, 2011