The price of oil climbed back above $98 a barrel Tuesday, a day after briefly touching a nine-month high, as traders awaited the start of a Federal Reserve policy meeting.
By early afternoon in Europe, benchmark oil for July delivery was up 37 cents to $98.14 a barrel in electronic trading on the New York Mercantile Exchange. On Monday, the Nymex contract closed at $97.77 a barrel after climbing as high as $98.74 during the session, its highest level since mid-September.
The focus in oil markets, as others, is on the Fed, as policymakers start a two-day meeting.
To help support the U.S. economic recovery, the Fed has been buying $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 financial system, helping many assets, including oil, to climb up off the lows witnessed during the global recession following the 2008-9 financial crisis.
Following the conclusion of its meeting on Wednesday, Fed chairman Ben Bernanke will hold a press conference and investors want to know what the Fed is planning, in particular when it may start reducing the amount of financial assets it is buying each month — so-called tapering. Few expect a change in policy on Wednesday as some of the recent economic data has disappointed. The uncertainty though has rattled markets in recent weeks and as a result, analysts said Bernanke will have to communicate the Fed's strategy effectively.
"Calm has settled over markets as anticipation builds," Credit Agricole CIB in Hong Kong said in a market commentary. "It's worth reiterating that effective Fed communication is the key to ensure that this calm continues otherwise market volatility will quite easily return."
Concern that the conflict in Syria could spread and disrupt oil supplies from key producing countries has boosted oil in recent days.
Investors will also be monitoring fresh information on U.S. stockpiles of crude and refined products.
Data for the week ending June 14 is expected to show a draw of 1 million barrels in crude oil stocks and a build of 1.2 million barrels in gasoline stocks, according to a survey of analysts by Platts, the energy information arm of McGraw-Hill Cos.
The American Petroleum Institute will release its report on oil stocks later Tuesday, while the report from the Energy Department's Energy Information Administration — the market benchmark — will be out on Wednesday.
Brent crude, a benchmark for many international oil varieties, was up 33 cents to $105.80 a barrel on the ICE Futures exchange in London.
In other energy futures trading on the Nymex:
— Wholesale gasoline added 1.18 cent to $2.8679 a gallon.
— Heating oil was up 0.62 cent to $2.9565 per gallon.
— Natural gas gained 4.1 cents to $3.916 per 1,000 cubic feet.
Pamela Sampson in Bangkok contributed to this report.