London: Oil rose Tuesday ahead of an expected decision by the Federal Reserve to pump more money into the US economy and after an apparent upward shift in price tolerance among oil producing countries.
The market was expected to trade in a tight range until today's decision by the US Federal Reserve, which analysts believe will be to start a new round of "quantitative easing".
The US central bank is widely expected to decide to buy around $500 billion (Dh1.836 trillion) in longer-term Treasuries over about six months in a move that could encourage more dollar weakness.
The dollar fell against a basket of currencies yesterday, adding extra support to crude oil and commodities. A fall in the dollar makes dollar-denominated commodities cheaper.
US crude for December rose 30 cents to $83.25 a barrel at 0914 GMT, adding to gains of nearly 2 per cent the previous session. ICE Brent climbed 9 cents to $84.71.
Traders and analysts were wary ahead of the Federal Reserve's move, expected at the end of its two-day meeting starting yesterday.
"We would be very cautious about going long at current levels in practically any of the markets, as we would want to wait and get this week's critical economic and political events behind us," said Edward Meir, senior commodity analyst at brokers MF Global.
The Fed's pending announcement overshadowed comments from Saudi Arabia's Oil Minister Ali Al Naimi on Monday that consumers would be comfortable with oil prices rising as high as $90 a barrel.
Qatar, another member of the Organisation of Petroleum Exporting Countries, also said a $70 to $90 price range would be reasonable, but nothing higher.
Ideal scenario
For much of this year, crude oil prices have been stuck between $70 and $80 per barrel, a range that Opec has said for the past two years it has seen as ideal for both producers and consumers.
But on Monday Saudi Arabia appeared to raise this range.
Al Naimi's comments were understood to signal the world's top oil exporter could allow prices to climb as high as $90.
