Oil rises, but choppy awaiting Fed, German court

Tue Sep 11, 2012 3:48pm EDT
 
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By Robert Gibbons

NEW YORK (Reuters) - Oil prices rose on Tuesday in choppy trading as expectations that the U.S. Federal Reserve will act to bolster the economy and that a German court will approve a euro zone rescue plan put pressure on the dollar and boosted crude futures.

Fed policy makers conclude their two-day meeting on Thursday. Some analysts and investors expect the U.S. central bank to launch a third round of bond-buying because of recent weak U.S. economic data. Additional stimulus would likely weaken the dollar and boost dollar-denominated oil prices.

The euro climbed to a four-month peak against the dollar on expectations a German court decision expected on Wednesday will back the euro zone rescue process, lending support to the region's common currency.

Higher August production reported by the Organization of the Petroleum Exporting Countries and recovering U.S. production after Hurricane Isaac's trek last week through the Gulf of Mexico helped keep prices in check.

Moody's ratings agency warned the U.S. credit rating may be downgraded if 2012 budget negotiations do not produce debt-reducing policies, adding more pressure to the dollar and helping support crude.

"Moody's downgrade pressured the dollar and added support for crude, but markets are waiting for the German court and Fed decisions," said Phil Flynn, an analyst at Price Futures Group in Chicago.

Brent October crude rose 59 cents to settle at $115.40 a barrel, having traded from $114.37 to $115.46. The Brent October contract expires on Thursday.

U.S. October crude pushed 63 cents higher to settle at $97.17 a barrel, back above the 200-day moving average of $96.61, a closely watched technical indicator.   Continued...

 
Gas pumps are seen at a petrol station in Prague May 10, 2012. REUTERS/David W Cerny