World oil prices rose slightly on Wednesday, off earlier multi-month highs, as official data showed that the US economy contracted in the fourth quarter last year.

Cautious trading set in also as markets awaited the outcome of a Federal Reserve monetary policy meeting and as the United States’ government said American crude inventories had shot higher last week, indicating weak demand for oil in the world’s biggest consumer of crude.

In late London deals, Brent North Sea crude for March traded at $114.60 a barrel, up 24 cents. Earlier in the day it had hit $115.24 a barrel—the highest point since mid-October.

New York’s main contract, light sweet crude for delivery in March, was meanwhile up two cents to $97.59 a barrel compared with Tuesday’s closing level.

Earlier on Wednesday, the contract reached $98.24—the highest level since mid-September.

Sucden brokers analyst Myrto Sokou said prices had spiked earlier in the day “as risk appetite increased following the recent robust economic data,” including news on Tuesday that US existing home sales had jumped nearly 13 per cent in December compared with one year earlier.

But the positive sentiment cooled after official data showed that the US economy contracted by 0.1 per cent in the final three months of 2012, as Washington slashed defence spending and businesses cut investment.

The Commerce Department said that despite the dismal fourth quarter, the economy expanded overall, growing a modest 2.2 per cent for the full year 2012, a pickup from 1.8 per cent in 2011.

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