Crude Rises Before Fed Decision On Stimulus

Crude oil held above $97.00 on Wednesday as investors await the conclusion of the U.S. Federal Reserve's final policy meeting of the year, which may show when the central bank will begin rolling back its massive monetary stimulus.

Today, the US central bank's monetary policy committee will conclude a two-day policy meeting. Talks of stronger economic data in recent weeks, including employment, confidence and retail sales, may increase the chances of a reduction of the monthly bond purchases.

The $85 billion in monthly bond purchases have been a major supporter of investment in global commodities, including oil, so a tapering decision will weigh on prices.

“In less than 12 hours, we will know about the definitive action the Fed plans to take on its easing program. Oil and a lot of other markets will take their cues from the comments. Nobody is on the front foot or the back foot at the moment”, said Ben Le Brun from OptionsXpress in Sydney.

Demand growth hopes from the world's largest oil consumer also gave support to oil prices after industry data showed a fall in crude stockpiles. The American Petroleum Institute showed that crude inventories fell by 2.5 million barrels last week.

Investors now await data from the US Energy Information Administration (EIA) to get a clearer picture of the country's demand outlook. The report is expected to show that crude supplies dropped by 3 million, gasoline rose by 1.5 million and distillates fell by 434,000.

Further support is provided by the worries from the prolonged supply outage from Libya, which failed this week to reopen its ports, amid an improving demand outlook following the strong economic data around the globe.

- WTI crude oil futures for January is trading around $ 97.43 a barrel after rising $0.15

- Brent futures for January settlement is trading around $ 108.42 a barrel after falling $0.02

- Natural gas is trading at $ 4.301 per cubic feet after rising 0.33%

- Gasoline is trading at $ 2.6512 per cubic feet after rising 0.15%

- Heating oil (diesel) is trading at $ 2.9651 a gallon after rising 0.07%