Brent edges up

Brent crude edged up in volatile trading while US crude ended little changed on Tuesday as investors eyed a US Federal Reserve two-day policy meeting for any signal of a change in monetary policy. The US dollar remained under pressure on expectations that the Fed will keep monetary policy accommodative, helping support dollar-denominated oil prices that have benefited by attracting investment as a hedge against inflation.
Traders also weighed comments by the chief of Saudi Arabia's state-run firm Aramco, who voiced concern about the impact of high oil prices on the global economy that pressured crude early Tuesday. The Saudi view contrasted with US Treasury Secretary Timothy Geithner's remarks that oil, "at current levels, on its own, it won't put the recovery at risk."
A power outage that affected operations at several refiners in the Texas City region near Houston lifted US gasoline and heating oil futures and helped keep crude futures supported. Brent crude for June gained 48 cents to settle at $124.14 a barrel, having bounced off a $122.78 low. US crude for June fell 7 cents settle at $112.21. Tuesday's trading saw US crude seesaw between a $111.12 low and a $112.64 peak. It reached $113.48 on Monday, its highest intraday price since September 2008, before ending the day down 1 penny.
Libya's civil war and violence-tinged unrest Syria and Yemen helped limit bearish sentiment or a price slide, keeping the potential for supply disruption in the region highlighted. Oil's rallies have been fuelled recently by geopolitical supply worries and expectations the dollar will stay under pressure, but price pull backs have resulted from increasing concerns about the threat to oil demand from high prices. "This week, it will be all about the Fed meeting. Volume and volatility will come back after the meeting," said Olivier Jakob of Petromatrix in Switzerland.
Both US crude and Brent trading volumes outpaced Monday's depressed totals, but they remained on pace to continue to lag 30- and 250-day averages, according to Reuters data. "Exchange rates and lack of confidence in the currency have been supportive to oil. The market is going to be cautious and wait to see if the Fed and (Chairman) Bernanke address rising energy prices and inflation," said Phil Flynn, analyst at PFGBest Research in Chicago.
Oil investors also awaited weekly oil inventory reports expected to show crude stocks rose last week. A Reuters poll on Tuesday expected gasoline stocks to be lower, posting what would be a 10th consecutive weekly decline. The forecast was for distillates to be up, only 100,000 barrels, with refinery capacity utilisation also rising. US retail gasoline demand fell last week by 0.7 percent from the previous week, but rebounded modestly versus the same year-ago period, a MasterCard Advisors' SpendingPulse report showed.
Industry group the American Petroleum Institute (API) will issue its weekly inventory data at 4:30 pm EDT (2030 GMT) on Tuesday, with the government's report issued by the US Energy Information Administration following on Wednesday at 10:30 am EDT (1430 GMT).