LONDON - OIL rose above US$137 (S$187) on Wednesday on an expected fall in US crude oil inventories and ongoing supply disruptions from Africa's top producer Nigeria.

Traders are also closely watching the movement of the dollar ahead of the US Federal reserve interest rate decision.

US light crude rose 46 cents to US$137.46 a barrel by 0910 GMT (5.10 pm Singapore time). On Tuesday, it rose as high as US$138.75, just shy of the record high of US$139.89 hit on June 16.

'There is the US inventory data and the US Federal Reserve meeting later today. Those two will be on top of the oil market's agenda,' said Mr David Moore, a commodities analyst at the Commonwealth Bank of Australia in Sydney.

US crude oil inventories probably fell by 1.4 million barrels last week, extending a decline for the sixth time in a row, a Reuters poll of analysts showed.

The poll also showed an expected 200,000-barrel drop in gasoline supplies and a 1.9 million-barrel increase in distillates stocks.

The US Energy Information Administration will release inventory data for the week to June 20 on Wednesday at 1435 GMT (10.35 pm Singapore time).

A weak dollar and continuing supply disruptions from Nigeria also kept oil prices near record levels, analysts said.

The dollar held steady against the yen and euro on Wednesday after dipping the previous day as a report showed that US consumer confidence had plunged to a 16-year low.

The weak data stirred doubts about the US Federal Reserve's ability to raise interest rates.

The Fed was expected to leave interest rates unchanged at the end of the two-day policy meeting on Wednesday.

US oil major Chevron delayed some exports of Nigerian Escravos crude oil exports after armed youths blew up a supply pipeline last week, a company official said on Wednesday.

Tensions between Israel and Iran over Tehran's nuclear programme are also keeping supply jitters alive.

Analysts are concerned about threats to the Straits of Hormuz, a narrow waterway separating Iran from the Arabian Peninsula through which roughly 40 per cent of the world's traded oil flows. -- REUTERS

Is this article useful to you?