West Texas Intermediate oil rose after a government report showed U.S. inventories unexpectedly declined last week and as European policy makers weighed bailout options for Cyprus.

Prices advanced as much as 1.1 percent. The Energy Information Administration, the Energy Department’s statistical arm, said stockpiles fell 1.31 million barrels to 382.7 million in the week ended March 15. U.S. crude production slipped 9,000 barrels a day from the highest level since 1992 to 7.15 million. Stockpiles at Cushing, Oklahoma, the largest U.S. oil-storage hub and the delivery point for New York-traded futures, shrank by 286,000 barrels to 49 million, the EIA reported.

Oil climbed before the report as Luxembourg Finance Minister Luc Frieden called for euro-area finance ministers to assemble a new rescue package for Cyprus. Cyprus yesterday rejected an unprecedented levy on bank deposits, causing futures to tumble.

WTI futures for April delivery, which expire today, rose to $93.13 on the New York Mercantile Exchange.

Brent for May settlement increased 71 cents, or 0.7 percent, to $108.16 a barrel on the London-based ICE Futures Europe exchange.

The four-day rise in gold prices was halted today, as calm returned to the markets, which reduced the appeal of gold as an alternative investment. Previously, the market was concerned about the fact that the Parliament of Cyprus rejected the agreement with the banks. Today, the markets calmed down after the vote in Cyprus, following which it was decided to reject the program of assistance to the euro zone, and traders are preparing the statements of the Federal Reserve System.

According to experts, the market has been satisfied that the impact of the crisis in Cyprus to other countries would be minimal and that a full-scale default in Cyprus and its subsequent exit from the euro zone could be avoided thanks to the support provided by the European Central Bank in the form of unlimited bond-buying program.

No fear was evident in the government bond market. Bond yields in Spain and Italy fell, despite the fact that demand for German bonds Ultrasafe lowered the cost of financing the 10-year German debt to the lowest level at an auction in July 2012.

Meanwhile, Finance Minister Michalis Sarris Cyprus said talks with his Russian counterpart Anton Siluanov on alternative financial support had been "very constructive."

Investors are waiting for the outcome of the meeting of the Federal Reserve and a news conference by its Chairman Ben Bernanke. If the market will see hints of the central bank tightening, pressure on gold skyrocket.

Change % Change Last

GOLD 1,611.30 6.70 0.42%

OIL 92.18 -1.56 -1.66%