LONDON: Oil dipped below $113 on Wednesday ahead of official US weekly oil data, which is expected to show an increase in crude stocks, putting a brake on a six-day gain to a fresh 4-week high on hopes for further stimulus measures from the Federal Reserve.
By 0859 GMT, Brent crude was down 10 cents to $113.92 a barrel, after settling at a four-week high on Tuesday. US crude fell 14 cents to $88.76.
Tuesday's slump in US consumer confidence to its lowest in two years, along with Fed minutes showing policymakers discussed a range of unusual tools they could use to help the economy, further bolstered expectations that the US central bank is ready to act.
The Fed is scheduled to meet on Sept. 20 to discuss options to help spur the faltering US economy.
"Yesterday's gain was pure speculation about potential quantitative easing and it was not driven by fundamentals. So some profit taking is coming in," Olivier Jakob with oil consultancy Petromatrix said.
"Today the focus is the data from the (US) Department of Energy and jobs data, which will affect oil demand."
A separate industry report showed late on Tuesday a sharp 5.1 million barrel rise in US crude inventories last week as imports rose and refinery utilisation dropped, while gasoline saw a big drop.
Investors are eyeing a string of labour market data due this week, including US ADP jobs data for August at 1215 GMT. They include unemployment and non-farm payrolls numbers on Sept. 2.
Although Brent has risen about 7 percent since Aug. 19, it is poised for its steepest monthly loss since June, while US crude is headed for its biggest fall since May due to fears of another recession in the United States and a debt crisis in the euro zone.
Investors were also watching the development of Tropical Storm Katia in the Atlantic, which picked up speed and could become a hurricane by Wednesday, the US National Hurricane Center said.
A tropical wave over the northwestern Caribbean Sea has a 10 percent chance of becoming a cyclone in the next 48 hours, and could move into the western Gulf of Mexico, home to a large concentration of oil and natural gas facilities.
Copyright Reuters, 2011