Brent crude rebounded towards $126 on Tuesday as investors awaited comments from the US central bank after the outlook improved for the world's largest economy amid simmering tension between the West and Iran that could threaten oil supply.
The Fed was expected to reinforce a view prompted by recent data that the US economy is recovering, buoying the demand outlook for the world's largest oil consumer, but it is unlikely to kick off further quantitative easing.
Brent crude rebounded 66 cents to $126 by 0303 GMT, after settling down on Monday for the first time in four sessions. The April Brent contract expires on Thursday.
"The FOMC could recognise that the economy has improved and this will have a positive impact on the market," said Tetsu Emori, a Tokyo-based commodities fund manager at Astmax Investments.