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Crude oil futures trim gains ahead of U.S. ISM report

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Investing.com - Crude oil futures trimmed gains during U.S. morning hours on Tuesday, coming off the highest level of the session ahead of a report on U.S. service sector activity later in the trading day.

Prices shot up to the highest levels of the session earlier as investors returned to the market to seek cheap valuations amid expectations demand from China will remain strong.

On the New York Mercantile Exchange, light sweet crude futures for delivery in April traded at USD90.48 a barrel during U.S. morning trade, up 0.4% on the day.

New York-traded oil prices rose by as much as 0.7% earlier in the day to hit a session high of USD90.72 a barrel. Nymex prices fell to USD89.38 a barrel on Monday, the lowest level since December 26.

Oil prices regained strength as China's National People's Congress began its annual session earlier in the day. Outgoing Premier Wen Jiabao announced an economic growth target of 7.5% for 2013, broadly in line with expectations.

China is the world's second largest oil consumer after the U.S. and has been the engine of strengthening demand.

Oil prices received an additional boost amid speculation the Federal Reserve will maintain its bond-buying program.

Federal Reserve Vice Chair Janet Yellen said on Monday the central bank's aggressive monetary stimulus was warranted given how far the economy was operating below its full potential.

Speculation the Fed would keep its loose monetary policy weighed on the U.S. dollar. The dollar index, which tracks the performance of the greenback against a basket of six other major currencies, was down 0.3% to hit 82.03.

Dollar-denominated oil futures contracts tend to rise when the dollar falls, as this makes oil cheaper for buyers in other currencies.

Oil traders also awaited fresh weekly information on U.S. stockpiles of crude and refined products to gauge the strength of oil demand in the world's largest oil consumer.

The American Petroleum Institute will release its inventories report later in the day, while Wednesday's government report could show crude stockpiles rose by 0.9 million barrels.

Friday's data on U.S. nonfarm payrolls will also be closely watched as investors attempt to gauge the strength of the economic recovery.

The U.S. is the world's biggest oil-consuming country, responsible for almost 22% of global oil demand.

Elsewhere, on the ICE Futures Exchange, Brent oil futures for April delivery added 0.5% to trade at USD110.69 a barrel, with spread between the Brent and crude contracts standing at USD20.21 a barrel.

Brent prices remained supported as a North Sea pipeline system remained shut for a third day after a platform leak.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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