Oil prices steady on eve of US rate decision
World oil prices stabilised on Tuesday as many traders sat on their hands on the eve of a crucial interest rate decision from the US Federal Reserve.
Brent North Sea crude for delivery in June rose 30 cents to $123.96 a barrel in London trade following a four-day Easter break.
New York's main contract, light sweet crude for June, fell 14 cents to $112.14 a barrel. It had reached a 2.5-year high of $113.48 on Monday.
Investors are switching their attention to the outcome of the Fed's two-day policy meeting beginning Tuesday.
The central bank's Federal Open Market Committee (FOMC) is widely expected to announce on Wednesday that it will maintain ultra-low interest rates to support the recovery.
Chairman Ben Bernanke will meanwhile hold his first post-FOMC press conference, the first for any Fed chairman.
"Focus seems heaviest on the Fed's interest rate decision and (Chairman) Bernanke's comments after the close Wednesday," said analyst Brenda Sullivan at the Sucden Financial brokerage in London.
"If the comments suggest that monetary policy will not be tightened, then commodities may experience higher prices."
She added: "Comments that instead suggest quantitative easing programmes will end in June could turn market focus toward prospects of US tightening (monetary policy) following many other nations."
The Fed's top policy panel will weigh whether the economic recovery can sustain itself with less central bank stimulus. The FOMC is expected to lower its growth forecasts during the meeting.
In addition, traders were also awaiting Thursday's publication of US gross domestic product (GDP) data for the first three months of 2011, which is key to future energy demand in the world's biggest economy.
The rate call and GDP data are crucial for the global energy market because the United States is the world's biggest oil-consuming nation.
At the same time, analysts said that unrest in the Arab world would keep price levels high.
"Traders and investors are now simply booking in profits after returning from a long weekend," said Victor Shum, a Singapore-based analyst with the Purvin and Gertz energy consultancy.
He added: "The unrest in the Middle East and North Africa region continues to be a key factor supporting high oil prices, especially the protests in Yemen and Syria besides the ongoing unrest in Libya."
Yemen's government and opposition will travel to Riyadh on Wednesday to sign an agreement brokered by Gulf states to end three months of political unrest that claimed over 130 lives, both sides told AFP.
Elsewhere, Syria sent more troops to the southern town of Daraa, where a deadly crackdown against pro-democracy protesters raged into a second day, activists said, as Washington considered "targeted sanctions" against Damascus.
And in Libya, forces loyal to Libyan leader Moamer Kadhafi attacked the besieged city's port, wounding African refugees and forcing a humanitarian ship to stay out to sea, an AFP journalist said.
© 2011 AFP