NEW YORK ( TheStreet) -- Crude oil seesawed on Tuesday and settled in line with the previous day's trade, as the Federal Open Market Committee meeting and Fed chairman Ben Bernanke's press conference scheduled for Wednesday weighed on the recent upside in the oil markets.
A key technical threshold was also weighing on the oil trade, as crude oil had topped $113 during Monday trading. The $113 level has proved to be the recent resistance point for the oil trade.
Nymex crude oil futures reached as high as $112.64 during Tuesday's market action, but settled in the afternoon at $112.21, higher than the previous settle of $112.11. Brent crude was recently trading at $124.22, up 0.4%.
"Pushing through $113 takes more buying support, and we're in a range where people are happy to take profits," said commodities analyst Matt Smith of Summit Energy. "Despite everything going on in the Middle East, it's a bit of a stalemate."Phil Flynn, market strategist at PFG Best, said that a key resistance level for commodities, more generally than specific to oil prices, has been tested this week, with oil hitting $113 on Monday and silver testing $50, and that the Fed meeting has heightened the focus on inflation and the run-up in commodities with a weak dollar. "I still think we exceed these levels; I think we just got there too soon, and that's one reason why people may have taken off some bets," Flynn said. "What happens with the Fed is a major event for commodities. I can't think of a more important Fed meeting in recent memory," the market strategist added. Gold and silver also headed lower on Tuesday morning. The market is looking for any recognition from the Fed of a link between its loose monetary policy and commodities inflation, on the one hand -- though no one believes "QE2" will end before it expires in June -- as well as any signal that a QE3 could be on the horizon, and Bernanke sticking to his argument that inflation is not a major concern and can be dealt with expeditiously by the Fed when, and if, needed. QE, or quantitative easing, is the process by which the Fed purchases long-term Treasuries with the objective of maintaining low interest rates so that the economic recovery may continue. The seesaw action in the oil trade could be part of a late-to-the-game market syndrome as well, said commodities trading adviser John McClane of Mobius Asset Management. "This has been the spot where oil pauses a little, and all the weaklings are run out, the profit-takers who came in late to the game and at the first visit from the boogeyman are heading out," McClane said. "It's going to be harder to push past $113 before the Fed meeting," the portfolio manager said.