London: Brent crude oil edged above $124 a barrel on Wednesday as support from a weaker dollar ahead of a Federal Reserve meeting expected to maintain its loose monetary policy countered rising US inventories.
The dollar slid to a three-year low as investors bet the Fed meeting, which ends on Wednesday, would keep an easy policy, helping support dollar-denominated oil that has attracted investment as a hedge against inflation.
Brent crude for June rose 31 cents to $124.45 a barrel by 2:40pm. On Tuesday, it gained 48 cents to settle at $124.14 a barrel, having bounced off a $122.78 low. US crude was up 22 cents to $112.43.
“Investors are being very cautious ahead of the Fed meeting and prices are drawing support from a weak dollar,” said Serene Lim, an analyst at ANZ. “Oil will continue to trade in this range till the outcome of the Fed meeting is known at least.”
US crude stocks jumped 4.9 million barrels last week as imports increased, the American Petroleum Institute (API) said on Tuesday before the release of the government’s inventory report later on Wednesday.
Violence in the Middle East, which has largely shut down Libya’s oil exports, has spilled over to Syria and Yemen, helping put a floor under the market.
Before the Fed’s decision at 12:00pm, investors will be watching out for the latest snapshot of US fuel supplies. A weekly report from the US Energy Information Administration at 10:30 am EDT (1430 GMT) is expected to show crude stocks rising by 800,000 barrels -- much less than the increase reported by the API on Tuesday.
Gasoline stocks are expected to fall 1.1 million barrels, while distillates are forecast to increase by 100,000 barrels.
U.S. crude has risen 23 percent so far this year and consumers in the world’s largest economy are starting to show signs of being hurt by higher fuel costs.
President Obama on Tuesday urged producers to lift crude output as he sought to deflect public anger over high gasoline prices. U.S. motor fuel prices have become a heated political issue after pushing towards $4 a gallon.
Obama’s appeal followed comments from top oil exporter Saudi Arabia earlier in the day that it was not comfortable with high oil prices and a strike last week by truckers in China protesting over higher fuel costs. (Reporting by Manash Goswami in Singapore and Alex Lawler; editing by Jason Neely) REUTERS
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