Oil prices ease as Fed decision and geopolitical risks remain in focus
Oil prices slipped slightly on Wednesday after gaining more than 1% in the previous session. Geopolitical jitters, particularly around Russian supplies, continued to support the market, while investors awaited the U.S. Federal Reserve’s interest rate decision.
Brent crude futures dipped 8 cents, or 0.1%, to $68.39 a barrel by 0630 GMT. U.S. West Texas Intermediate (WTI) crude also fell 6 cents, or 0.1%, to $64.46 a barrel. Both benchmarks had settled over 1% higher on Tuesday, fueled by concerns that Russian exports may face disruption.
Russian supply risks keep market supported
According to Reuters, Russia’s state pipeline operator Transneft warned producers they may be forced to cut output after Ukrainian drone strikes targeted export ports and refineries.
“The market remains laser-focused on geopolitical volatility and possible Russian supply disruptions. These jitters are keeping prices elevated,” said Emril Jamil, senior oil analyst at the London Stock Exchange Group.
Fed meeting adds to oil market volatility
Investors are also watching the Fed’s two-day meeting, where policymakers are widely expected to cut rates by 25 basis points. The decision is likely to stimulate the U.S. economy and support fuel demand.
“Markets are betting on a 25-basis-point cut, which could lower borrowing costs and boost energy demand,” said Priyanka Sachdeva, senior analyst at Phillip Nova. She added that geopolitical risks and supply concerns have also helped keep crude supported, though global oversupply from OPEC+ output increases could limit gains.
IG analyst Tony Sycamore noted that traders will pay close attention to the number of dissenting voices within the Fed, the outlook for further cuts, and the tone of Fed Chair Jerome Powell. Any short-term rally may be tempered by a “buy the rumour, sell the fact” response, he added.
U.S. inventory data provides mixed signals
In a supportive sign for crude, data from the American Petroleum Institute showed U.S. crude and gasoline stockpiles declined last week, while distillate inventories rose.
Crude stocks fell by 3.42 million barrels, gasoline dropped by 691,000 barrels, while distillates increased by 1.91 million barrels. The market is now awaiting confirmation from the U.S. Energy Information Administration (EIA), which will release its official report later Wednesday.
A Reuters poll forecast a drop of around 900,000 barrels in crude inventories, a 1 million barrel rise in distillates, and a slight 100,000 barrel increase in gasoline.
