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The Fed has already cut interest rate cuts to ease liquidity problems in the financial markets triggered by the U.S. subprime crisis. This has helped spur a flood of investor money into commodities, pushing oil toward its inflation-adjusted, all-time peak of $101.70 a barrel in April 1980.

On Wednesday traders will shift focus to weekly U.S. inventory data expected to show crude stocks rose 600,000 barrels in the week to October 26, helping buffer stocks after last week's sharp decline, which kicked off an $8 rise over four days.

Distillate stocks were seen falling by 1.1 million barrels and gasoline stocks down by 300,000 barrels.