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West Texas Intermediate swung between gains and losses and inched up in early European trading on Wednesday as U.S. lawmakers took steps toward resolving the budget stalemate, reducing the possibility of a government default. Prices drew some support on events in Egypt and Libya over the weekend. Gains however were limited after the American Petroleum Institute reported that U.S. crude stockpiles rose last week, while the Energy Information Administration trimmed its 2013 and 2014 global demand forecasts.

On the New York Mercantile Exchange, WTI crude for delivery in November rose by 0.07% to $103.56 per barrel at 7:20 GMT. Prices held in range between days high and low of $103.75 and $103.36 a barrel respectively. The contract rose by 0.5% on Tuesday and trimmed its weekly decline to 0.1% following Wednesdays advance.

Meanwhile on the ICE, Brent futures for November settlement fell by 0.10% to $110.05 a barrel at 7:20 GMT. The contract shifted in days range between $110.28 and $109.88 per barrel. The European benchmark rose by 0.5% on Tuesday but trimmed its weekly advance to 0.7% after Wednesdays retreat.

The market drew some support after U.S. lawmakers took some steps toward raising the governments borrowing limit. President Barack Obama said on Tuesday he would be willing to hold discussions over the U.S. budget if Republicans agree to re-open the government and raise the debt ceiling. Meanwhile, Republican House Speaker John Boehner rejected the presidents stance that hell only talk when his terms are met and insisted on immediate negotiations.

According to JPMorgan analysts, every week of shutdown reduces the economic expansion in the last three months by an annualized 0.12%. The Congressional Budget Office said that the government will run out of cash between October 22 and October 31, if the debt ceiling does not get extended by October 17, resulting in an unprecedented U.S. default. According to IHS Inc. in Lexington, Massachusetts, the government shutdown costed the economy $1.6 billion last week in lost output.

Analysts however expect the standoff to be resolved soon without the deadline being breached as an unprecedented U.S. debt default would dwarf the 2008 Lehman Brothers bankruptcy. Some expect a last-minute agreement to be reached.

Tetsu Emori, commodity fund manager at Astmax Investments in Tokyo, said for CNBC: “The situation in the U.S. is still uncertain, but I believe it will be resolved in time and dont see much impact on oil markets … should be looking at the fundamentals rather than political issues, and we see that the oil market is still well supported.”

Prices were also supported on some renewed geopolitical risk. Political clashes in Egypt and the capture of a senior al Qaeda officer in Libya over the weekend raised concerns over supply from the Middle East, building back up some of oils eroded geopolitical premium. The region accounts for a third of global output.

Inventories rise

The market was pressured on Wednesday after the industry-funded American Petroleum Institute reported yesterday that U.S. crude stockpiles fell last week. The report showed that crude inventories added 2.8 million barrels, while gasoline and distillate fuel supplies declined by 2.8 million and 1.1 million barrels respectively.

APIs data however is considered as less reliable than EIAs statistics as it is based on voluntary information from operators of refineries, pipelines and bulk terminals. According to a weekly Bloomberg survey of analysts, the Energy Information Administration should report that U.S. crude stockpiles rose by 1.6 million barrels last week. Gasoline inventories are expected to have risen by 1.1 million barrels, while distillate fuel supplies probably fell by 1.2 million barrels. Refinery utilization likely dropped to 88% from 89% in the preceding week.

The EIA revised down its forecasts for demand growth in 2013 and 2014 in a monthly report. The agency expects oil demand growth at 1.17 million bpd next year, down 20 000 bpd from previously estimated in September. This years growth received a downward revision by 140 000 bpd to 970 000 bpd. Non-OPEC supply forecast for 2013 was trimmed by 60 000 to 1.51 million bpd and the 2014 prediction was revised up by 50 000 to 1.5 million barrels per day.

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