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Brent crude futures was down 85 cents to $82.79 a barrel by 1026
GMT, while U.S. West Texas Intermediate (WTI) crude was at
$78.82, down 81 cents. Both hit three-month highs on Tuesday.
Oil prices have been rallying for four weeks, with investors
buoyed by signs of tighter supplies, largely linked to output
cuts by the Organization of the Petroleum Exporting Countries
(OPEC) and allies, as well as pledges by Chinese authorities to
shore up the world's second-biggest economy.
However, there are concerns around whether China, also the
world's second biggest oil consumer, will actually be able to
step up policy support.
"We still need to wait for actual policies - the risk is that
these policies fall short of expectations," said ING head
commodities strategist Warren Patterson.
"The market will continue to be in a tug-of-war between
tightening global supply and fears of slowing demand due to the
global economic slowdown," added Hiroyuki Kikukawa, president of
NS Trading, a unit of Nissan Securities.
Investors had also squared their positions ahead of the Fed rate
decision, Kikukawa continued.
The U.S. central bank is widely expected to deliver a 25
basis-point rate hike later on Wednesday.
"Today’s rate hike, if it occurs, is widely anticipated to be
the last one before a long pause, yet Fed officials will be very
wary of raising false hopes of calling a day on the
unprecedented monetary tightening program," said PVM analyst
Tamas Varga.
Meanwhile, U.S. crude stocks rose by about 1.32 million barrels
in the week ended July 21, according to market sources citing
American Petroleum Institute figures on Tuesday. Analysts polled
by Reuters had expected a 2.3 million barrel drawdown.
The surprise build in crude and distillate stocks - if confirmed
by U.S. government data later today, added Varga, "could
temporarily take the wind out of the bull’s sail."
(Reporting by Natalie Grover in London; Additional reporting by
Yuka Obayashi and Trixie Yap; editing by Miral Fahmy, Kim
Coghill and Emma Rumney)
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