Crude oil prices rose on Tuesday on speculation that the U.S. Federal Reserve will cut interest rates today, sending the dollar down and spurring investments into commodities.
Oil rebounded as the dollar fell against the euro today with traders forecasting that the Fed, which meets later today, will cut short term rates by up to 1 percentage point.
Crude futures for delivery in April rose $1.64 or 1.55 percent to $107.32 a barrel on the New York Mercantile Exchange at 11:38 a.m. London's Brent crude rose $2.41 or 2.35 percent to $105.23 a barrel on the ICE Futures Exchange.
On Monday crude hit a record high of $111.80 in the U.S. before dropping more than $4 late afternoon. Oil declined yesterday after the Fed cut its discount window interest rate and JPMorgan Chase & Co. bought Bear Stearns Cos. for $240 million on Sunday avoiding bankruptcy for the company.
The purchase of Bear Stearns raised fears of an economic recession in the United States that could curb demand for oil. The U.S. is the top consumer of oil worldwide.
The U.S. dollar traded today at $1.5783 per euro at the New York Mercantile Exchange compared from a $1.5730 yesterday.
Tomorrow the Energy Department will report on weekly crude supplies at 10:30 a.m. in Washington.