LONDON: Brent crude oil rose towards $108 per barrel on Thursday due to a signal that the U.S. Federal Reserve will keep stimulus measures for now and on a warning from the International Energy Agency (IEA) that prices are likely to rise.
U.S. crude fell, however, pressured by expectations of a rise in U.S. inventories.
Brent for December delivery was up 79 cents at $107.91 per barrel at 1425 GMT. The contract had climbed $1.31 on Wednesday, supported by Libyan supply outages.
It is up 2.7 percent this week, on track for its biggest weekly gain since July, after four weeks of losses.
U.S. crude was down 72 cents at $93.16 per barrel, after settling up by 84 cents on Wednesday.
In prepared comments to be delivered to a Senate committee hearing later on Thursday, Janet Yellen, who is to be the next head of the Fed, said she thought the U.S. central bank had more work to do to aid the economy.
"There were a few decent data points, so there was some concern that the Fed would announce the tapering soon, but the comments have pushed expectations of timing back," said Richard Mallinson, geo-political analyst at Energy Aspects.
He was referring to the timing of any reduction in the Fed's current $85 billion-a-month bond-buying programme.
Yellen was due to speak in a Senate hearing at 1500 GMT.
Oil markets look well supplied in the short term, but prices could rise in the next few months in response to political turmoil in Libya, security problems in Iraq and stronger consumption during the northern hemisphere winter, the IEA said.
"The recent easing of prices may be relatively short-lived," the West's energy agency said in a monthly report. "End-user demand is on the verge of a seasonal ramp-up, while refinery throughputs look set for a steep rebound in November and December."
Investors will also pay close attention to a weekly inventory report from the U.S. Energy Information Administration (EIA) due at 1600 GMT for clues about fuel demand in the world's biggest economy.
A Reuters survey showed EIA crude inventories were expected to rise by nearly 1 million barrels.
Data from industry group the American Petroleum Institute on Wednesday showed that U.S. crude stocks rose by 599,000 barrels overall last week, with an increase of 1.7 million barrels at the Cushing, Oklahoma delivery hub.
Prices of Brent crude have been supported by a severe cut in oil exports from Libya where political turmoil has seen output cut to a fraction of its 1.2 million bpd export capability.
A differing supply outlook on either side of the Atlantic pushed Brent oil's premium to U.S. crude to its highest since March, reaching a peak of $14.01.
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