The price of oil inched up Monday but gains were tempered by the prospect of a further reduction in U.S. central bank stimulus.
Benchmark U.S. crude for March delivery was up 8 cents at $96.72 a barrel at 0520 GMT in electronic trading on the New York Mercantile Exchange. The contract fell 68 cents to settle at $96.64 a barrel on Friday.
The Federal Reserve meets for two days from Tuesday. Officials are widely expected to reduce the central bank’s monthly bond buying that has underpinned an economic recovery.
So far, the reduction has been minimal. The Fed has cut the amount of bonds it buys each month by $10 billion to $75 billion but many economists think the stimulus could end this year if the U.S. economic recovery gains steam.
The International Monetary Fund’s managing director Christine Lagarde warned over the weekend of the risks posed to global economic recovery from phasing out the U.S. stimulus too rapidly and deflation in Europe.
Also, less monetary easing in the U.S. could boost the dollar, making oil less affordable for holders of other currencies.
Slowing growth in China was another factor weighing on oil prices. Preliminary results of a survey released last week showed China’s manufacturing would contract in January.
Brent crude, used to set prices for international varieties of crude, was down 36 cents at $107.52 on the ICE exchange in London.
In other energy futures trading on Nymex:
— Wholesale gasoline was down 0.4 cent at $2.666 a gallon.
— Natural gas rose 2.4 cents to $5.421 per 1,000 cubic feet
— Heating oil was up 0.2 cent at $3.018 a gallon.