Light sweet crude for July delivery advanced 0.15 percent or 13 cents to $84.16 a barrel in electronic trading on the New York Mercantile Exchange during Asian trading hours. Brent crude oil futures for July delivery gained 0.01 percent at $95.77 a barrel on the ICE futures exchange in London.
Market participants are likely to stay glued to the Federal Open Market Committee statement (FOMC) meeting and interest rate decision, which is due to be released at 2:15 pm EDT. The interest rate is expected to remain unchanged at 0.25 percent.
Investors expect that with a slowdown in job creation for the third straight month, disappointing retail sales, industrial production and consumer confidence, the Fed will announce more quantitative easing measures to regain the economic growth momentum, most likely through extending its Operation Twist program.
If a major stimulus plan is disclosed, it would be wildly bullish for commodities and equities, and exceptionally bearish for the greenback. However the chances of this happening are low, Jason Schenker, president of Prestige Economics LLC, said in a note, the Wall Street Journal reported.
The more-likely outcome is a moderate change in which the Federal Reserve extends what is known as Operation Twist, by which it sells short-term bonds to buy longer-term ones, or signals a longer period of super-low rates, Schenker added.
Sentiment was also buoyed after the Spanish government managed to sell debt more than expected in a keenly watched bond auction Tuesday. The 10-year Spanish government bond yields also declined to below 7 percent.
Market attention is also focused on the formation of the Greek government following weekend elections. Antonis Samaras, the leader of the centre-right New Democracy party, is expected to form a new pro-bailout coalition government by Wednesday. The chief of the New Democracy party has held talks with the leaders of the PASOK and the small Democratic Left group to forge a new coalition government at the earliest.
After the markets open Wednesday, the U.S. Energy Information Administration (EIA) is due to report weekly inventory data that are expected to show that stockpiles fell by 1.11 million barrels last week.
On Tuesday, light sweet crude for July delivery rose 76 cents and settled at $84.03 a barrel on the New York Mercantile Exchange. Meanwhile, the American Petroleum Institute said that crude inventories had decreased by 550,000 barrels for the week ending June 15.