Investors Cautious Ahead Of Bernanke Testimony

As investors waited for US Federal Reserve Chairman Ben Bernanke's testimony before congress, Brent crude oil fell slightly as most were reluctant to buy without clarification from Bernanke about the Fed's future plans.

The dollar has been on a roller coaster ride since Bernanke announced that the Fed could start tapering its $85 billion per month stimulus plan. Last week, Bernanke admitted that the bank wasn't going to cut back on its quantitative easing until 2014 which chipped away at the dollar's gains.

Brent slipped a bit to $107.91 at 5:00 GMT on Wednesday morning as investors braced themselves for any unexpected surprises from Bernanke's report.

A surprise rise in US gasoline stocks also put Brent under pressure as the summer months are the US' driving season which typically depletes stockpiles. CNBC reported that Gasoline stocks jumped by 2.6 million barrels, which far exceeded analysts' expectations. However, crude inventories fell by 2.6 million barrels, the third consecutive week of decline.

Geopolitical tension in the Middle East and Africa has also buoyed prices, but some of that pressure could be relieved as the West pushes forward with a diplomatic resolution to the Iran's disputed nuclear program. After several unsuccessful attempts to resolve the matter through peaceful negotiation, the two sides remained at a stalemate with no forward progress.

Now, there is speculation that talks between the two will resume and with a new Iranian leader in power, many are optimistic about the outcome.

African supply disruptions still remain a threat though, as conflict in Libya threatens to cut into its oil production. On Tuesday, armed protesters surrounded an eastern Libyan oil port and demanded its workers put a stop to operations.

BY Laura Brodbeck