Brent slips below $110 on weak U.S. jobs data, crude build

Reuters

* Brent/WTI spread widens to $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 slipped below $110a barrel on Wednesday after disappointing U.S. jobs data and abuild in crude stockpiles raised concerns about oil demand inthe world's largest oil consumer.

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.

But oil price losses were capped by a weak dollar as thedisappointing payroll data raised hopes the U.S. Federal Reservewould stick to its economic stimulus this year.

Brent crude oil futures slipped 24 cents to $109.73a barrel by 0627 GMT, after earlier hitting a session-high of$110.06.

U.S. crude oil futures for December delivery fell 51cents to $97.79. The November futures, the previous front-monthcontract, expired on Tuesday after hitting a low of $97.50, itsweakest since July 1.

The Brent/WTI spread broadened to $12, itsbiggest 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 will look now for further economic and oil data toindicate what the Fed might do about its stimulus programme, hesaid.

"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.

FED RESERVE MONETARY EASING

Brent found support early in the session from the belatedrelease of U.S. jobs data showing nonfarm payrolls increased by148,000 workers in September, less than expected.

The dollar eased and the traders initially focused on thelikelihood of more protracted Fed support, as the reportsuggested the economy was losing momentum even before the U.S.fiscal standoff that partially shut down the government for morethan two weeks.

"There is also likely to be added volatility over the nextfew months, given hiring by some firms was likely to be delayeddue to the fiscal uncertainty," ANZ analysts wrote in a note onWednesday. "In such an environment the Fed is likely to keep thefoot firmly on the gas pedal with tapering a 2014 story."

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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