.Oil barrel

Oil prices dropped today, although the decline was capped after the market received support from a positive global economic outlook and as investors eagerly anticipate inventory data from the US, to offer an indication about demand in the world’s largest oil consumer.

Brent crude slipped by 13 cents to $112.29 a barrel, while US crude dropped by nine cents to $96.59 a barrel, reported Reuters.

Oil received support from the Bank of Japan on Tuesday, when it announced its plans to provide more stimulus to boost the world’s third largest economy and from robust German data.

These developments have added to the confidence of investors, who were already upbeat with positive economic data from the world’s top two economies, US and China.

In US, the government is expected to extend its debt limit by about four months to 19 May 2013, thereby temporarily easing the concerns of a devastating default.

The government also deferred a decision on TransCanada’s rerouted Keystone XL oil pipeline until after March 2013. The US state of Nebraska’s governor, however, approved a plan on Tuesday for part of the line to run through the state.

Once it begins operations, the pipeline will supply Canadian crude to refineries in Texas. On Tuesday, analysts reduced the US crude forecast for 2014 by $1.50, to $96.50 per barrel.

The American Petroleum Institute will publish its weekly US oil inventory data on Wednesday, while the US Energy Information Administration will release its data on Thursday.

According to a Reuters poll of analysts, the data from these organisations is expected to reveal increases in US crude, gasoline and distillate inventories.

Image: The US is expected to extend its debt limit by four months to 19 May. Photo courtesy of Lars Christopher Nøttaasen.