LONDON (SHARECAST) - Crude oil prices rose for the fifth consecutive session on Tuesday as traders gear up for a key Federal Reserve meeting.
Markets are expecting US Federal Reserve policy makers to announce further stimulus measures at the end of the two-day policy meeting on Thursday.
A string of weak US economic data, including last Friday's disappointing jobs data, has spurred hopes that the Fed will undertake a third round of quantitative easing to stimulate growth.
Expectations of more easing measures were increased last month when Fed chairman Ben Bernanke indicated, at a key speech in Jackson, that the Fed may soon take action to boost growth. However many analysts aren't so sure the Fed will announce additional stimulus measures on Thursday.
Quantitative easing is seen as beneficial for oil demand as it reduces the value of the dollar. Oil, which is priced in dollars, becomes cheaper for holders of other currencies.
The dollar's weakness on Tuesday encouraged interest in crude oil. The greenback came under pressure after Moody's Investor Service threatened to remove the US AAA rating if 2013 budget talks do no produce policies that reduce the nation's debt.
Otherwise traders were also preparing for a weekly US oil inventory report due from the US Energy Information Administration.
On Tuesday the American Petroleum Institute said US crude oil supplies increased by 221,000 barrels last week. Gasoline stockpiles fell by 4.16m barrels while distillates, which includes heating oil and diesel, increased by 2.55m barrels.
Separately, in its short-term outlook, the EIA said it oil demand in the US to drop 1.5% this year to a 15-year low.
Crude oil for October delivery advanced 63 cents to settle at $97.17 a barrel on the New York Mercantile Exchange.
Meanwhile Moody’s warning that the US could lose its top credit rating sent gold futures higher on Tuesday.
Gold for December delivery increased $3.10 to settle at $1,734.90 an ounce on the Comex division of the New York Mercantile Exchange.
The prospect of a possible bond-buying programme from the Fed and the weaker dollar also supported interest in the yellow metal.
Silver for December fell 7 cents to close the day at $33.57 an ounce.