The price of oil rose above $98 Tuesday as traders awaited the latest word on both the Federal Reserve's monetary policy and U.S. oil supplies.
Benchmark oil for July delivery rose 67 cents to close at $98.44 a barrel on the New York Mercantile Exchange.
The focus in oil markets, as in others, was on the Fed, as policymakers began 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 the financial system, helping many assets, including oil, to climb from the lows witnessed during the global recession following the 2008-2009 financial crisis.
After the meeting ends on Wednesday, Fed chairman Ben Bernanke will hold a press conference. Investors want to hear if the Fed plans to reduce the amount of financial assets it is buying each month. Few expect a change in policy on Wednesday as some recent economic data has been disappointing. The uncertainty though has rattled markets in recent weeks.
Jim Ritterbusch, president of energy consultancy Ritterbusch and Associates, said in a note to clients that big gains Tuesday in the stock market indicated that Wall Street expects the Fed to maintain its current policy.
Oil traders 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 decline of 1 million barrels in crude oil stocks and an increase of 1.2 million barrels in gasoline stocks, according to a survey of analysts by Platts, the energy information arm of McGraw-Hill.
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, gained 55 cents to $106.02 a barrel on the ICE Futures exchange in London.
In other energy futures trading on the Nymex:
— Wholesale gasoline added 2 cents to $2.88 a gallon.
— Heating oil was rose 1 cent to $2.96 per gallon.
— Natural gas gained 3 cents to $3.91 per 1,000 cubic feet.
Pablo Gorondi in Budapest and Pamela Sampson in Bangkok contributed to this report.