Oil prices climb on eve of Fed meeting

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World oil prices rose on Monday, boosted by the weak dollar, rising equities, upbeat economic data and hopes that the Federal Reserve may take steps to boost the US economy this week, analysts said.

New York's main contract, light sweet crude for delivery in September, gained 44 cents to 81.14 dollars a barrel.

Brent North Sea crude for September advanced 53 cents to 80.69 dollars in late London trade.

Investors looked ahead to Tuesday's Federal Open Market Committee (FOMC) meeting amid speculation that Fed chairman Ben Bernanke may hint at fresh steps to lift the US economy after last week's weak employment data.

"Crude oil prices held strongly above the 81-dollar area, supported by a weakening US dollar and continuing gains in the global equity markets following robust economic data from (the) eurozone and Germany," said Sucden analyst Myrto Sokou in London.

German exports rocketed 28.5 percent to 86.5 billion euros in June, the highest level since October 2008 to boost hopes that the country and its neighbours are all doing well.

Sokou said market sentiment was upbeat "amid hopes for an improvement in global oil demand if the Federal Reserve further eases its monetary policy at Tuesday's meeting".

The Fed's rate-setting FOMC panel meets Tuesday amid pressure to resume crisis-era spending to restart a stalled recovery.

The 10-member body is expected to keep interest rates at historic lows but Fed watchers will be looking for any hint of a return to stimulus spending.

After planning to reel in such measures, figures showed the US economy lost 131,000 jobs in July, much worse-than-expected and putting the Fed's policies back in the spotlight.

The news sent oil prices tumbling on Friday as traders fretted over the demand outlook in the world's biggest energy consuming nation.

The Fed battled the global financial crisis by spending more than one trillion dollars, buying up Treasury bonds, mortgage-backed securities and other financial instruments to boost liquidity and demand.

© 2010 AFP

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