Oil nears $113 after Bernanke talk

Brent futures held near $113 (€86.32) a barrel on Wednesday after the Federal Reserve's affirmation of its commitment to monetary stimulus renewed hopes of a revival in demand growth in the US.

Federal Reserve chairman Ben Bernanke's defended its bond-buying stimulus before Congress and a spike in US home sales boosted Asian shares, base metals and other riskier assets.

Yet, concerns over spending cuts in the United States and a prolonged instability in Europe as elections in Italy failed to produce a strong government kept a lid on prices.

Brent crude slipped 6 cents to $112.65 a barrel this morning, after rising to as much as $113.10.

Bernanke said Fed policymakers recognise the potential risks from their extraordinary support for the economy, including the possibility it might fuel unwanted inflation or stoke asset bubbles. But the risks did not seem material at the moment, he said, adding the central bank has all the tools it needs to retreat from its monetary support.

Markets were also buoyed by data showing US home prices closed out 2012 with the biggest annual gain in more than six years while sales of new homes spiked in January, the latest sign that the long-suffering housing market was on the mend.

A bearish target at $111.97 remains unchanged for Brent, while a bearish target at $91.15 remains unchanged for US oil, according to Reuters technical analyst Wang Tao.

Yet, oil, particularly the US contract, drew some support as American Petroleum Institute data showed US crude stockpiles rose less than expected.

Stocks rose 904,000 barrels in the week to February 22nd, the data showed, while analysts had expected a rise of 2.4 million barrels. Official data from the Energy Information Administration (EIA) is due later in the day.

Reuters