Oil falls ahead of Fed rate decision

Tokyo — Oil prices retreated further from 10-month highs on Wednesday ahead of the US Federal Reserve’s rate decision, with investors uncertain when peak rates will be hit and how much of an impact it will have on energy demand.

Prices fell despite a bigger-than-expected draw in US oil stockpiles and weak US shale output that indicated tight crude supply for the rest of 2023.

Global benchmark Brent crude futures fell slightly over $1 to $93.33 a barrel, and were last down 80c, or 0.8%, at $93.54 a barrel by 3.10am GMT. Brent hit $95.96 on Tuesday, its highest since November.

US West Texas Intermediate (WTI) crude futures shed 0.8%, or 75c, to $90.45 a barrel, after climbing to a 10-month high of $93.74 a barrel the previous day. The October WTI contract expires on Wednesday and the more active November contract was down 70c, or 0.8%, to $89.78 a barrel.

“The oil rally is taking a little break as every trader awaits a pivotal Fed decision that might tilt the scales of whether the US economy has a soft or hard landing,” said Edward Moya, senior market analyst at data and analytics firm Oanda.

Moya added that the oil market is still “very tight” and will remain so over the short-term.

“Unless Wall Street grows nervous, the Fed will kill the economy, the crude demand outlook should [only] gradually soften, but the oil market will easily have a supply deficit throughout winter.”

Investors eye Fed rate decision 

Investors are awaiting a raft of central bank rate decisions this week, including one by the US Federal Reserve on Wednesday, to assess the outlook for economic growth and fuel demand. The Fed is widely expected to keep interest rates on hold, but the focus will be on its policy path, which is unclear.