* Federal Reserve reaffirms bond-buying policy
* MasterCard says U.S. gasoline demand down, weighs on oil
* Coming up: EIA oil data, 10:30 a.m. EST Wednesday
(Recasts, updates with settlement prices, market activity)
By Robert Gibbons
NEW YORK, Dec 14 (Reuters) - U.S. crude oil prices slipped
on Tuesday, seesawing with the dollar and pressured after the
Federal Reserve said economic recovery was still to slow and
reaffirmed the central bank's commitment to its bond-buying
plan designed to stimulate the economy.
Crude oil prices seesawed as expectations that weekly oil
inventory reports would show gasoline stockpiles rose last week
and a separate report of weak fuel demand pressured U.S.
gasoline futures <RBc1>.
But with cold weather in the United States and Europe
boosting heating fuel demand, U.S. heating oil futures rose and
helped limit crude oil's losses.
U.S. crude for January delivery <CLc1> fell 33 cents to
settle at $88.28 a barrel, having seesawed between $87.74 and
$88.95. Prices reached a 26-month high of $90.76 on Dec. 7.
January crude oil options on the New York Mercantile
Exchange expire on Wednesday, ahead of the January futures
contract's expiration on Dec. 20.
Total U.S. crude trading volume was above 542,000 lots with
about an hour left in post-settlement trading, still trailing
the previous session's 589,228 lots traded and the 30-day
average of 667,478 lots.
ICE Brent crude for January <LCOc1> managed a 2 cent gain
to settle at $91.21 a barrel, trading between $90.68 and
$91.73, and slipping in post-settlement trading.
The January Brent contract expires on Thursday.
Brent prices were supported by news that daily crude oil
output from nine of the main North Sea streams will fall by
more than 5 percent in January, according to data compiled on
Tuesday from trading sources. []
The U.S. dollar rose slightly against the euro and yen and
the dollar index <.DXY> was up after the Federal Reserve
announced after its policy meeting that the economic recovery
was still too slow to bring down unemployment, and reaffirmed
its commitment to purchase $600 billion in bonds to stimulate
the economy. []
The stronger buck pressured dollar-denominated oil and
other commodities, by making them costlier to purchase for non
U.S.-based investors.
Strong Chinese implied oil demand for November[] has bolstered demand expectations even as
investors remain cautious after China did not raise interest
rates despite data at the weekend pegging November inflation at
a 28-month high.
The positive sentiment in financial markets will not,
however, be enough to sustain an oil price above $90 unless
supported by strong fundamentals while downside financial risk
from the European debt crisis remains, analysts warned.
"The support is coming from the financial side. I would not
be surprised to see the oil prices stagnating or even falling
(in the coming days)," Eugen Weinberg, head of commodity
research at Commerzbank in Frankfurt told Reuters, adding that
supply and demand did not justify the current price levels.
Adding to demand concerns, U.S. retail gasoline demand fell
2.7 percent last week as prices rose to their highest level
this year, a report from MasterCard Advisors said on Tuesday.
Demand was also 1.3 percent lower than the year-ago period,
the report said. []
EYEING U.S. OIL INVENTORIES
U.S. crude oil inventories were expected to have declined
2.5 million barrels in the week to Dec. 10, according to a
Reuters expanded survey of analysts released on Tuesday before
the American Petroleum Institute releases its weekly crude
stocks report at 1630 EST (2130 GMT) . []
But gasoline stockpiles were expected to be up 1.7 million
barrels and rising stockpiles were expected to ease recent
supply tightness in the New York Harbor region delivery point
for the gasoline contract.
Distillate inventories were forecast to be down 500,000
barrels as investors will eye the impact on stockpiles as cold
weather in the U.S. Midwest and Northeast and northern Europe
boosted heating fuel demand. [] []
(Additional reporting by Gene Ramos in New York, Una Galani in
London and Rebekah Kebede in Perth; Editing by Alden Bentley)
