Oil prices fell on Wednesday after hitting multi-month highs in the previous session, as investors braced for the U.S. Federal Reserve’s interest rate policy announcement later in the day.
Brent crude futures for May were down $1.20 or 1.4% at $86.18 a barrel by 1425 GMT. U.S. West Texas Intermediate futures for April delivery , which expire on Wednesday’s settlement, fell $1.49 or 1.8% to $81.98.
At their intra-day low the contracts were trading more than $1 lower than previous settlement, but analysts still viewed the market as strong.
“The fundamental backdrop has not changed and remains supportive given the ongoing refinery and export problems from Russia,” PVM analyst Tamas Varga said.
Brent had settled at its highest since Oct. 31 in the previous session at $87.38 a barrel, while WTI hit its highest since Oct. 27 at $83.47.
Ukrainian attacks on Russian refining assets have helped propel crude prices higher as market participants assessed the impact on crude and fuel supply balances.
Investors are looking ahead to the Federal Reserve’s announcement later on Wednesday for signs of its interest rate path for the rest of the year.
The Fed is not predicted to cut borrowing costs, but fresh economic projections could signal fewer interest rate cuts and a later start to the policy easing than previously expected.
The U.S. dollar index edged higher ahead of the Fed decision, which can also dent oil demand for buyers in countries using other currencies.
Investors will also be looking ahead to official stockpile data from the U.S. Energy Information Administration at 2:30 p.m. ET on Wednesday.
“Barring any unexpected negative surprises from the Fed or from the EIA this afternoon, the current weakness is not expected to last,” Varga said.
The American Petroleum Institute reported U.S. crude oil and gasoline stockpiles fell last week, while distillate inventories rose, according to sources.
Lead image (Credit: Reuters)
