SINGAPORE: Brent futures slipped below $108 a barrel on Thursday on expectations the US Federal Reserve would scale back its massive economic stimulus and that world powers would strike a preliminary deal with Iran over its nuclear programme.
Minutes of the Fed's Oct. 29-30 policy meeting showed officials felt they could decide to start scaling back the stimulus at one of its next few meetings, which would boost the dollar and weigh on commodities such as oil.
But worries over supply from Libya helped stem the slide.
Brent crude had fallen 25 cents to $107.81 a barrel by 0345 GMT, after gaining the most in a week and ending up $1.14. US oil extended losses by 23 cents to $93.62, after settling 4 cents lower.
"The issue of tapering is back to the fore after yesterday's Fed minutes," said Victor Shum, vice-president of energy consultancy IHS Energy Insight.
"Talks between Iran and world powers are erasing some geopolitical risks, but the situation in Libya is putting a floor on prices."
The combination of factors should keep oil in a tight trading range until clear details are available on when the Fed will rollback its stimulus or geopolitical tensions in the Middle East worsen, Shum said.
He expects Brent to average at around $108 a barrel for the rest of the year, and the US benchmark to stay around $94 a barrel in the short term.
Major powers resumed talks on Wednesday with Iran over its nuclear programme.
While the United States warned it would be "very hard" to clinch a breakthrough deal, policymakers have said an interim accord on confidence-building steps could finally be within reach.
That may help defuse a decade-old standoff and dispel the spectre of a wider Middle East war over the Islamic Republic's nuclear ambitions, which has kept oil near $100 a barrel despite a weak consumption outlook.
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