Further price reductions could be restricted if US Energy Information Administration data later on Wednesday shows stock drawdown below predictions
NEW YORK
Oil prices continued their downward trend on Wednesday due to market caution ahead of the US Federal Reserve’s decision on interest rates, a strong US dollar and investor profit-taking.
International benchmark Brent crude traded at $87.03 per barrel at 10.46 a.m. local time (0746 GMT), a 0.40% decrease from the closing price of $87.38 per barrel in the previous trading session.
The American benchmark West Texas Intermediate traded at $82.44 per barrel at the same time, a 0.35% fall from the previous session that closed at $82.73 per barrel.
Oil prices decreased in early trade on Wednesday due to uncertainty over the US Fed’s upcoming monetary decision that will be announced later in the day.
Although it is predicted that the Fed will maintain the policy rate, the path that the markets take is anticipated to be influenced by indicators from the policy text and a statement from Fed Chair Jerome Powell.
According to analysts, the latest macroeconomic data is likely to fuel inflationary concerns. Therefore, clues about how the Fed assesses these statistics will be crucial for determining the course of action to be taken in the near future.
With the Fed expected to maintain the policy rate for now, oil prices are set to be suppressed as high interest rates boost the value of the US dollar, making oil more expensive for holders of other currencies.
On Wednesday, the US dollar index increased by 0.56% to 103.54, deterring more expensive oil trade and curtailing price rises on the back of profit-taking from higher prices at the beginning of the week.
Further price reductions could be restricted if US Energy Information Administration data later on Wednesday shows a stock drawdown below estimates.
The American Petroleum Institute late Tuesday announced an estimated decrease of 1.5 million barrels in US crude oil inventories, against the market prediction of a build of 77,000 barrels.
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