Oil prices rise ahead of Fed, Germany action

Crude oil prices rose modestly Tuesday as cautious investors awaited this week's US Federal Reserve policy meeting and a key German court ruling on a eurozone rescue fund. Market speculation was high that the Fed's Federal Open Market Committee (FOMC) would announce new economic stimulus at the end of a two-day meeting Thursday. Expectations that Germany's Constitutional Court on Wednesday will approve the use of the European Stability Mechanism, the eurozone financial aid fund, also supported oil prices. New York's main contract, light sweet crude for delivery in October, rose 63 cents to close at $97.17 a barrel. Brent North Sea crude for delivery in October settled at $115.40 a barrel, up 59 cents from Monday's close. "The petroleum markets are probing the upside on moderate volume in Tuesday trade, supported by expectations that US petroleum inventories declined last week and anticipation that the FOMC will announce a third round of bond purchases," said Timothy Evans at Citi Futures. The markets were waiting for the US Department of Energy's weekly US petroleum supplies report, due Wednesday, to gauge demand in the world's biggest oil-consuming country. Earlier Tuesday OPEC revised its 2012 oil demand forecast higher following a small increase in US consumption and a "drastic" rise in Indian demand after July's huge power blackout. The Organization of Petroleum Exporting Countries estimated world oil demand of 88.74 million barrels per day (mbpd) for this year, up from the previous estimate of 88.72 mbpd, and higher than 87.89 mbpd in 2011. "World economic turbulence did not slow oil consumption seasonality from its summer trend," OPEC said. "Not only did US oil consumption grow slightly, but Indian oil demand grew drastically."