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Oil prices slip on profit taking

Oil prices Tuesday fell on profit taking ahead of a weekly report on US petroleum inventories and the conclusion of the much-anticipated US Federal Reserve policy meeting.

US benchmark West Texas Intermediate for January delivery declined 26 cents, closing at $97.22 a barrel on the New York Mercantile Exchange.

European benchmark Brent oil futures for February delivery fell 97 cents to $108.44 a barrel in London trade.

Heading into Tuesday, US oil prices were at the higher end of their roughly $92-$98 range since late October. Oil prices rose Monday after Libya protesters refused to lift a months-long blockade of key exports.

"There's been a little bit of profit taking from yesterday," said John Kilduff, founding partner of hedge fund Again Capital.

Kilduff said US oil prices benefited from the start-up this week of a new route to ship oil from Houston, Texas, to Houma, Louisiana, that is expected to help relieve a glut of supply on the Texas Gulf Coast.

Brent oil, in turn, was weakened by signs of progress in talks between Libya protesters and the central government, Kilduff said.

A note from Eurasia Group said the two sides in Libya "are making progress toward reaching a deal." Eurasia predicted a resumption of oil exports from eastern Libya in the first quarter of 2014.

The dispute concerns effort to win oil revenues and political autonomy for Cyrenaica, the oil-rich eastern part of the country.

Oil markets are also gearing up for Wednesday's conclusion of the Fed monetary policy meeting, which will consider whether the US economy is strong enough to scale back the Fed's big bond-buying program.

Traders are also eyeing the release Wednesday of the weekly US oil inventory report. Analysts on average expect crude inventories declined by 2.7 million barrels for the week ended December 13, according to a survey by Dow Jones Newswires.