Oil futures, reversing a two-day losing streak, rose slightly Tuesday, following a recovery in U.S. equities and the euro. Traders also appeared to be anticipating action out of the Federal Reserve this week to boost the sagging U.S. economy.
Light, sweet crude for October delivery rose 33 cents, or 0.4%, to $86.03 a barrel on the New York Mercantile Exchange. The October Nymex contract expires Tuesday. The Nymex contract for November delivery was up 46 cents, or 0.5%, to $86.27 in morning trading. Brent crude on the ICE Futures Europe exchange for November delivery was up $1, or 0.9%, to $110.14 a barrel.
A two-day meeting of the Federal Open Market Committee begins Tuesday, and any actions the Fed may take to boost the economy would come at the conclusion of the meeting Wednesday afternoon.
The bounce in oil prices "seems somewhat tenuous," said Peter Donovan, a vice president and oil trader at Vantage Trading. "It's not a dramatic recovery, and we're certainly looking at it with some trepidation."
"It seems like the market is anticipating some sort of stimulus," Donovan added "and my personal opinion is, I'm wondering what these guys [at the Fed] are going to do. I'm skeptical on the effect of any further monetary stimulus at this point."
In bidding up prices, the market also shrugged off a Standard & Poor's downgrade of Italian debt, focusing instead on renewed optimism that a definitive solution to Greece's sovereign-debt problems was finally in the works.
"We're seeing a reverse of risk appetite," said Matt Smith, a commodities analyst at Summit Energy. "It's all really related to the focus shifting away from Greek debt concerns and onto hopes of some kind of stimulus coming from the Federal Reserve meeting."
The euro was trading at $1.3692 against the dollar early Tuesday, and the Dow Jones Industrial Average opened up less than 1%.
Data due Wednesday from the U.S. Energy Information Administration are expected to show crude-oil stockpiles have fallen by 1.7 million barrels after falling 6.7 million a week ago, according to the mean of seven analyst forecasts gathered by Dow Jones Newswires.
Front-month October reformulated gasoline blendstock, or RBOB, was up 1.12 cents, or 0.4%, to $2.7077 a gallon. October heating oil was up 1.5 cents, or 0.5%, to $2.9597 a gallon.