Oil rises with Wall Street

Wall Street: Oil arose alongside on Wednesday

Crude oil futures rose in choppy trading on Wednesday, getting a lift from US equities despite pressure from a larger-than-expected increase in US crude inventories and a report that Iran may consider a halt to its nuclear program.

Prices moved little after the US Federal Reserve, as expected, said at the end of a two-day policy meeting that it will keep interest rates exceptionally low at least through late 2014, Reuters reported.

"Oil got support from equities, which are on a rally mode and as support developed after the day's lows around $103 was not violated," said Hamza Khan, analyst at the Schork Group in Villanova, Pennsylvania, said according to the news wire.

The central bank said the US economy had been expanding moderately and that the labor market had improved in recent months. It noted, however, that while the jobless rate had declined, it remained elevated.

Later, Fed chairman Ben Bernanke said at a press conference that the central bank remains prepared to do more to ensure that the economic recovery continues.

"The recent rise in gasoline prices has created a temporary bulge in headline inflation and overall inflation, but we expect to pass through the system and assuming no new shocks in the oil sector - inflation ought to moderate about 2% this year," Bernanke said.

US crude inventories rose almost 4 million barrels in the week to 20 April, up for the fifth week in a row, the US Energy Information Administration said. A forecast in a Reuters poll had called for a 2.7-million-barrel build.

In London, ICE Brent crude for June delivery settled at $119.12 a barrel, gaining $0.96, the highest close since 13 April. Brent rebounded after two straight days of losses.

Brent was also supported by news of delays in North Sea Forties loading in May due to production problems at the UK's largest oilfield, trade sources said, disrupting supply of the oil that helps set global prices.

US June crude settled up $0.57 at $104.12 a barrel, highest since 17 April.

"US June crude's $103.49 was a pivot and the test of $104.49/$104.51 was key," said Tony Rosado, options broker at New York-based GA Global Markets.

Brent's premium against US crude widened to $15 at the close, from $14.61 on Tuesday.

Brent's volume outpaced US crude, hitting 15% above its 30-day average, according to Reuters data.

US crude volume was down 9% from its 30-day average.

In early trade, prices fell after a report from Bloomberg said Iran was considering a Russian proposal to halt its nuclear work to avert new European Union sanctions. The report was sourced to Tehran's envoy in Moscow.

The West alleges that Iran is developing atomic weapons, but Iran insists its nuclear program is for civilian use.

The tensions spawned by Tehran's nuclear program had lifted prices in March to their highest this year, as wranglings with the West created fears of supply disruption from the No. 2 producer in the Organization of the Petroleum Exporting Countries.

Both the European Union and the United States have imposed sanctions going into effect this summer, but Iran had agreed to resume long-stalled talks about its disputed program with six world powers.

Some comments from Israel on Iran have also become more conciliatory. Israel's military chief said in an interview published on Wednesday he does not believe Iran will decide to produce an atomic bomb.

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