Brent seesaws, U.S. crude up awaiting Fed, German court

NEW YORK (Reuters) - Brent oil futures edged higher in seesaw trading on Tuesday and U.S. crude pushed back above its 200-day moving average as expectations that the U.S. Federal Reserve will act to bolster the economy lent support and countered pressure from an improved supply picture.

The U.S. central bank's policy committee concludes a two-day meeting on Thursday, and some analysts and investors expect the Fed will launch a third round of bond-buying because of recent weak U.S. economic data. Additional stimulus would likely weaken the dollar and boost dollar-denominated oil prices.

The euro climbed back to a four-month peak against the dollar on expectations a German court decision expected on Wednesday will back the euro zone rescue process.

Higher August production reported by the Organization of the Petroleum Exporting Countries and recovering U.S. production after Hurricane Isaac's trek last week through the Gulf of Mexico helped keep prices in check.

Moody's ratings agency warned the U.S. credit rating may be downgraded if 2012 budget negotiations do not produce debt reducing policies, adding more pressure to the dollar and helping support crude.

"Moody's downgrade pressured the dollar and added support for crude, but markets are waiting for the German court and Fed decisions," said Phil Flynn, an analyst at Price Futures Group in Chicago.

Brent October crude dipped 3 cents to $114.78 a barrel by 12:29 p.m, having traded from $114.37 to $115.20. The Brent October contract expires on Thursday.

U.S. October crude rose 44 cents to $96.98 a barrel, pushing back above the 200-day moving average of $96.61, a closely watched technical indicator.

The $97.31 session high was still almost a dollar below the $98.29 intraday peak from August 23. Prices fell to $93.95 on August 23 and have remained in the $94-$98 range since.

Total crude trading volume continued to be lackluster ahead of the German court and Federal Reserve meeting results. Brent turnover lagged its 30-day average by 32 percent, with U.S. dealings 45 percent under their 30-day average.

U.S. October heating oil and RBOB gasoline futures rose 0.3 percent. Gasoline's $3.0447 session peak left the $3.0541 contract high in place.

Graphic-U.S. crude analysis: http://link.reuters.com/tux52t

Graphic-Brent analysis: http://link.reuters.com/zux52t

GRAPHIC-China crude output: http://link.reuters.com/fut96s

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OPEC SAYS PRODUCTION UP

OPEC production rose about 260,000 barrels per day (bpd) in August, the producer group said in a monthly report that left its demand growth forecast for 2013 unchanged.

OPEC said the production rise came even with a European Union embargo on Iran's exports because of higher output from other members of the 12-member group.

Crude prices jumped more than 9 percent in August and sparked concern in the United States and other consumer governments about the threat to already anemic economic growth from rising oil prices.

The possibility that strategic petroleum reserves may be released to address storm-related U.S. supply disruptions and to mitigate the impact of a European Union embargo on Iranian oil has loomed as a curb to bullish sentiment, according to analysts and traders.

The U.S. Energy Information Administration on Tuesday raised its forecast for 2013 global oil demand growth by 130,000 bpd and lowered its forecast for non-OPEC oil production for both this year and next.

U.S. crude oil and fuel inventories likely dropped last week, according to a Reuters survey of analysts on Monday, with imports and production in the early stages of recovery after the interruption from Hurricane Isaac.

(Additional reporting by Peg Mackey in London and Osamu Tsukimori in Tokyo; Editing by Marguerita Choy and Jim Marshall)

Source: http://news.yahoo.com/oil-rises-above-115-ahead-fed-meeting-105051337--finance.html

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