Oil futures halted a two-session slide Tuesday that had erased more than 5% of their value on optimism that U.S. central bankers will soon announce steps to stimulate the U.S. economy.

Light, sweet crude for October delivery settled up $1.19, or 1.39%, at $86.89 a barrel on the New York Mercantile Exchange. The October contract expired Tuesday. the November Nymex contract settled up $1.11, or 1.3%, at $86.92. November Brent crude contracts on the ICE Futures Europe exchange also advanced, settling up $1.40, or 1.28%, at $110.54 a barrel.

The Federal Open Market Committee began a two-day meeting Tuesday, with market observers speculating that another round of quantitative easing is in the works--particularly one move, nicknamed "the twist." That would focus on shoring up long-term interest rates to spur greater capital investment and lending now.

As has been the case with prior rounds of quantitative easing by the Fed, traders are expecting such a move would flood the market with dollars, driving oil prices higher. Cheaper dollars can make oil more expensive, as the dollar-denominated currency becomes less expensive for holders of other currencies.

Any decisions by the Fed would be announced after the meeting ends Wednesday afternoon.

"Today is, for the most part, really a sit-and-wait kind of day," said Kurt Kinker, the chief market analyst with Mirus Futures. "It's the Fed meeting tomorrow that everyone's waiting for."

Overall volume was light, with about 429,000 contracts traded, far below the 200-day moving average of 700,000. Fewer than 24,000 contracts of October crude traded as it expired, and just 246,000 contracts of November crude changed hands.

Traders are mixed on what impact a "twist" type of stimulus would have on the oil market. Some decline to even speculate, but others suggest it would provide a more modest boost in prices than the two prior rounds.

"We know that QE1 became instant hot money. Dollars sold off, so people bought commodities," said Phil Flynn, senior market analyst for research firm PFG Best. "But if they're buying the longer end of the curve, it would make the dollar weaker but spread out over a longer period of time...It's going to be more supportive, but not as immediately commodity-bullish as a regular QE."

Crude-oil stockpiles are expected to have fallen by 900,000 barrels, according to the mean of 15 analyst forecasts gathered by Dow Jones Newswires. The American Petroleum Institute, an industry trade association, releases its figures for the same period at 4:30 p.m. EDT Tuesday.

Front-month October reformulated gasoline blendstock, or RBOB, traded up 0.49 cent a gallon, or 0.2%, at $2.7014. October heating oil rose 1.69 cents, or 0.57%, to $2.9616 a gallon.