Price of oil rises 67 cents to $98.44

Associated Press

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 after the 2008-09 financial crisis.

After the meeting ends today, Fed chairman Ben Bernanke will have 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 today 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 also will be monitoring fresh information on U.S. stockpiles of crude and refined products.