Brent slips below $110, but supported by weak dollar


* Brent/WTI spread widens to nearly $12 in heavy selling

* Fed tapering expectations pushed to 2014 after payrollsdisappoint

* Coming up: EIA oil inventory data at 1430 GMT

By Jessica Jaganathan

SINGAPORE, Oct 23 (Reuters) - Brent crude edged lower under$110 a barrel on Wednesday, supported by a weak dollar asdisappointing U.S. jobs data raised hopes the U.S. FederalReserve would stick to its economic stimulus this year.

Any delay in cutting back on the Fed's bond buying programmecould stoke demand in the world's largest oil consumer. U.S.crude was also knocked back by a build in stocks that widenedthe gap between the two major oil contracts.

The onset of seasonal U.S. refinery maintenance, coupledwith pipeline outages, has swollen domestic stockpiles andstretched the Brent-WTI oil spread to its widest since April.

Brent crude oil futures slipped 15 cents to $109.82a barrel by 0352 GMT, after earlier hitting a session-high of$110.06.

U.S. crude oil futures for December delivery slipped38 cents to $97.92. The November futures, the previousfront-month contract, which expired on Tuesday hit a low of$97.50, its weakest since July 1.

The Brent/WTI spread was holding close to $12,its biggest gap since mid-April.

"WTI prices are largely dictated by the amount of supply inthe U.S. at the moment, which is why WTI really underperformedBrent overnight," said Ben Le Brun, a market analyst atOptionsXpress in Sydney.

Traders are going to be looking now for further economicdata to indicate what the Fed might do about its stimulusprogramme, he said.

"Markets have priced in a tapering story maybe pushed outinto 2014 ... So now, we're probably looking for economic datacoming out in the next 24 hours to dictate prices."

Data from the American Petroleum Institute showing crudestocks building at Cushing, Oklahoma, after 14 weeks of declinehelped to trigger selling of U.S. crude.

Investors are waiting for the latest weekly report from theU.S. Energy Information Administration (EIA), which will returnto its normal schedule this week after the U.S. governmentresumed operations after its shutdown.

U.S. crude prices were also under pressure with a rise inoutput from major shale oil plays, according to an EIA report.


Brent found support earlier in the session from the belatedrelease of U.S. jobs data showing nonfarm payrolls increased by148,000 workers in September, less than expected. While theemployment gain in August was revised up, the July figure wasrevised down to be the weakest since June 2012.

The report suggested the economy was losing momentum evenbefore the U.S. fiscal standoff that partially shut down thegovernment for more than two weeks, lending credence to thecentral bank's decision to hold off on reducing its stimulus.

The U.S. dollar wallowed near a two-year low against theeuro on Wednesday, making oil and other commodities priced inthe greenback cheaper for holders of other currencies.

Tenuous relations between the United States and SaudiArabia, the most important oil producer in the Middle East, alsosupported a geopolitical risk premium in Brent.

Saudi Arabia's intelligence chief is vowing that the kingdomwill make a "major shift" in relations with the United States toprotest perceived American inaction over Syria's civil war aswell as recent U.S. overtures to Iran, a source close to Saudipolicy said on Tuesday.

Holding any Brent gains in check, Libya's oil production isstable at around 600,000 barrels per day (bpd), where it hasbeen for about a month, as the government works to end protestsat fields and ports that have cut shipments for months, theNational Oil Corp. (NOC) said.

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