Oil back to gains (Reuters) (26-01-2011)

SINGAPORE – Oil had gains on Wednesday ahead of a statement from the U.S. Federal Reserve expected to reaffirm an improved economic outlook for the world's largest oil consumer while investors await weekly stocks data.

U.S. crude oil for March delivery rose 19 cents to $86.38 a barrel by 3:10 a.m. ET, after posting a 1.91 percent loss on Tuesday, but is still on track for its first monthly decline since August.

ICE Brent crude for March rose 54 cents to $95.79 a barrel while as dollar weakens oil becomes more affordable for holders of other currencies.

In case Brent breaks the $95 support level, it will trigger a sell-off similar to Tuesday but prices may charge toward $100 if a resistance at $96 is broken.

Brent is likely to stay supported on lower crude inventories in Europe and as investors prefers to put their money in the European price marker over WTI.

U.S. crude stocks rose by 2.1 million barrels last week, or more than expected as imports increased, industry data from the American Petroleum Institute (API) showed on Tuesday.

Distillate stocks fell a whopping 5.0 million barrels and gasoline supplies rose 1.7 million barrels.

Source: Reuters