New York's main contract, West Texas Intermediate (WTI) for March delivery, was up seven cents at USD 96.71 in mid-morning trade while Brent North Sea crude for March eased 34 cents at USD 107.54.

Tan Chee Tat, investment analyst at Singapore-based Phillip Futures, said investors were sitting on the sidelines amid "heightened anticipation that they (the Fed) will further engage in tapering".

Markets are waiting to see if US central bank's Federal Open Market Committee (FOMC) will cut another USD 10 billion from monthly asset purchases when it meets on Tuesday and Wednesday.

In December, the FOMC said it would begin tapering the stimulus by USD 10 billion to USD 75 billion a month in January.

"If they were to taper, in the short term, it is likely to hurt demand for crude oil," Tan said.

The so-called tapering of the Fed's asset purchases would likely boost the greenback, making dollar-priced oil more expensive for countries using other currencies, dampening demand.

But Tan said in the long-term, the move would signal "better prospects for crude oil" as it indicated the Fed's confidence in US economy, which would translate into stronger demand.

He added that investors were also closely monitoring developments following the recent opening of the Southern leg of the controversial Keystone XL pipeline in United States.


Latest News  from Business News Desk