By Nick Godt, MarketWatch
NEW YORK (MarketWatch) -- Crude-oil futures advanced on Tuesday, following a 1.8% drop in the previous session, as the dollar fell back amid further European support for Greece and ahead of the Federal Reserve's decision on interest rates, due at 2.15 p.m. Eastern time.
Crude oil for April delivery was up $1.12, or 1.4%, to $80.91 a barrel in electronic trade.
Speculation has mounted that the central bank might remove its pledge to keep interest rates at historically low levels "for an extended period of time."
But the Fed "will probably keep its pledge to hold rates exceptionally low for an "extended period", with the backdrop being "continued job losses, wobbly housing stats and subdued inflation," according to Sal Guatieri, senior economist at BMO Capital Markets.
The dollar index (DXY 79.98, -0.28, -0.34%) , which measures the U.S. unit against a basket of six major currencies, fell to 79.98, down 0.2%.
A lower dollar tends to lift dollar-denominated commodities as it makes them cheaper for holders of other currencies and lifts their appeal as a hedge against weakening currencies.
Also lifting the euro and pressuring the dollar, finance ministers from the 27-nation European Union meeting in Brussels Tuesday are widely expected to endorse Greece's fiscal austerity plans.
The American Petroleum Institute, an industry group, will report its estimate of U.S. petroleum inventories in the latest week. The Energy Information Administration will report the government's estimates on Wednesday.
Analysts polled by Platts expect an increase of 1.9 million barrels for the week ending March 12.
Members of the Organization of the Petroleum Exporting Countries will meet on Wednesday in Vienna. OPEC isn't expected to make any changes to its daily output quotas. Read more on the OPEC meeting.
