Brent crude held steady near $109 a barrel on Wednesday after the huge storm Sandy whiplashed the US East Coast, reducing fuel demand even as refineries in the region gradually resumed operation.

Fuel supply in the storm-hit region is expected to bounce back quickly as most refineries emerged unscathed, but demand was likely to take a much deeper knock as roads and airports remained shut.

Brent crude for December delivery was down 15 cents to $108.93 by 0229 GMT. The front-month contract is set to post its largest monthly fall since June as concerns about slowing global economic growth stoked fears of lower fuel demand despite supply risks in the Middle East.

U.S. crude for December edged up 10 cents to $85.78, on track for the biggest monthly loss since May.

"We may have a rapid return of supply but the demand will be slower to recover," Tony Nunan, a risk manager at Mitsubishi Corp said.

Millions of people were left reeling in the aftermath of the winds and heavy rains of the massive storm on Tuesday, as New York City and many parts of the eastern United States struggled with flooding and extensive power outages.

"This is really the last thing that the U.S. needed," Nunan said, adding that Americans without insurance coverage would have less spare cash to spend on consumer goods just as the world's largest economy was showing signs of recovery.

The region's biggest refinery, in Philadelphia, and several others were ramping up operations on Tuesday after escaping damage. But flooding at the second-largest refinery, Phillips 66's 238,000 barrel-per-day plant in Bayway, New Jersey, plus power glitches at two other plants and a key New Jersey terminal hub slowed the recovery in fuel supplies.

The outage at Bayway, nicknamed the "gasoline machine" for its key role in supplying motor fuel to the New York City area, and a fire at BP Plc's residual hydrotreater in Texas City boosted gasoline prices. November gasoline futures were up 2.42 percent at $2.7949 a gallon.

Investors will continue to keep a close watch for any damage to oil infrastructure and on fuel demand after the storm.

"It is still too early to tell whether there has been any significant damage to the network of oil terminals, pipelines, and trucking facilities in the region, but if logistics are damaged oil prices will likely remain under selling pressure," ANZ analysts said in a note.

U.S. crude oil inventories rose slightly more than expected last week while distillate inventories dropped sharply even as refinery operations jumped, data from the American Petroleum Institute showed. Crude inventories increased by 2.1 million barrels in the week to Oct. 26, the data showed, higher than analysts' expectation of a 1.5 million barrels rise.

The U.S. Energy Department has delayed its weekly petroleum inventory report by a day to Thursday due to the storm. – Reuters