Oil prices drift lower
Crude oil prices pulled lower on Tuesday as investors took profits after a recent rally, analysts said.
Traders were also waiting for the results of a meeting Tuesday and Wednesday of the US Federal Reserve and the release of a weekly US report indicating energy demand in the world's biggest economy.
London's Brent North Sea crude for June dipped 66 cents to 86.17 dollars per barrel, having struck 87.75 on Monday -- a level last seen in October 2008.
New York's main contract, light sweet crude for June, slid 90 cents to 83.30 dollars on Tuesday.
"It could be due to profit-taking because (New York) crude oil prices rallied quite a bit," said Serene Lim, a Singapore-based analyst with ANZ bank.
"All eyes will be on the Fed statement... Depending on what comes out from the statement, that would impact interest rates and ultimately the US dollar and crude oil prices," she told AFP.
Because oil is traded in dollars, the strength or weakness of the US currency will affect oil prices and demand.
The US Federal Reserve board will discuss whether or not to raise its main interest rate from the zero-to-0.25 percent range where they have been since December 2008.
The historically low rates are seen as crucial to support the economic recovery -- keeping borrowing costs low and fuelling spending.
Investors will be closely watching to see if the Fed repeats its long-standing promise to keep exceptionally low rates "for an extended period."
Any shift in the language could be seen as heralding tighter monetary policy that could tame investors' appetite for risk.
The US economy, a key engine for global growth, is recovering from its worst downturn since the 1930s.
Lim said oil market players will also monitor the weekly US Department of Energy (DoE) report due for release Wednesday.
The report is a crucial indicator of demand in the world's biggest energy consuming nation.
© 2010 AFP