Oil prices rise as Fed meets on interest rates (12:03 p.m. 11/3/09)

Since oil is largely bought and sold in dollars, investors holding stronger currencies can buy more crude for less and have done so in recent months, sending the price of benchmark crude above $80 near the end of October.

Though the central bank isn’t expected to take any action on interest rates, statements issued after such meetings can hint at the Fed’s take on the state of the economy.

“Oil is still being controlled by larger macroeconomic forces and not just demand and demand expectations,” said PFGBest analyst Phil Flynn. “The main concern is still all about what the Federal Reserve might do.”

Crude has been plentiful because the global economic slowdown has crimped demand, particularly in the United States.

Most analysts believe crude supplies in the U.S. grew again last week and on Wednesday, the Energy Department will release its weekly supply and demand figures for oil and gasoline.

Benchmark crude for December delivery gained 63 cents to $78.76 a barrel Tuesday on the New York Mercantile Exchange.

The steady rise in crude prices has pulled the retail price for gasoline higher.

Pump prices rose for more than two week straight before leveling off over the weekend.

The average price for a gallon of regular gasoline fell a half penny overnight to $2.686, according to auto club AAA, Wright Express and Oil Price Information Service. That’s 22.5 cents more than a month ago, and 27.1 cents more than gas cost at this time last year.

In other Nymex trading, heating oil rose 1.12 cents to $2.0572 a gallon. Gasoline for December delivery gained 0.67 cent to $1.997 a gallon. Natural gas for December delivery gained 1.3 cents to $4.837 per 1,000 cubic feet.

In London, Brent crude for December delivery added 75 cents to $77.30 on the ICE Futures exchange.