THE price of oil rose above US$98 Tuesday as traders awaited the latest word on both the Federal Reserve's monetary policy and US oil supplies.
US benchmark oil for July delivery rose 67 cents to close at US$98.44 a barrel on the New York Mercantile Exchange.
The focus in oil markets, as in others, was on the Fed, as policymakers began a two-day meeting.
To help support the US economic recovery, the Fed has been buying US$85 billion in bonds every month in an attempt to keep long-term interest rates low and encourage lending. The new money generated has flowed into the financial system, helping many assets, including oil, to climb from the lows witnessed during the global recession following the 2008-2009 financial crisis.
After the meeting ends today, Fed chairman Ben Bernanke will hold a press conference. Investors want to hear if the Fed plans to reduce the amount of financial assets it is buying each month. Few expect a change in policy today as some recent economic data has been disappointing. The uncertainty though has rattled markets in recent weeks.
Jim Ritterbusch, president of energy consultancy Ritterbusch and Associates, said in a note to clients that big gains yesterday in the stock market indicated that Wall Street expects the Fed to maintain its current policy.
Oil traders will also be monitoring fresh information on US stockpiles of crude and refined products.
Data for the week ending June 14 is expected to show a decline of 1 million barrels in crude oil stocks and an increase of 1.2 million barrels in gasoline stocks, according to a survey of analysts by Platts, the energy information arm of McGraw-Hill.
The American Petroleum Institute will release its report on oil stocks later yesterday, while the report from the Energy Department's Energy Information Administration - the market benchmark - will be out today.
Brent crude, a benchmark for many international oil varieties, gained 55 cents to US$106.02 a barrel on the ICE Futures exchange in London.
In other energy futures trading on the Nymex:
- Wholesale gasoline added 2 cents to US$2.88 a gallon.
- Heating oil was rose 1 cent to US$2.96 per gallon.
- Natural gas gained 3 cents to US$3.91 per 1,000 cubic feet.
